Gold bond issue price fixed at Rs 4,889 per gm; subscription opens Monday

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The issue price for Sovereign Gold Bond Scheme 2021-22, which will open for subscription for five days from May 31, has been fixed at Rs 4,889 per gram of gold, the Reserve Bank of India (RBI) said on Friday.

The Sovereign Gold Bond Scheme 2021-22- Series-III or the third tranche will be open for subscription from May 31 to June 4, 2021.

Earlier, the government had announced to issue the Sovereign Gold Bond (SGB) in six tranches from May 2021 to September 2021. The RBI will issue the bonds on behalf of the Government of India.

"The nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three working days of the week preceding the subscription period...works out to Rs 4,889 per gram of gold," said the RBI, which issues the bonds on behalf of the central government.

Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.

"For such investors, the issue price of Gold Bond will be Rs 4,839 per gram of gold," it said.

The bonds will be sold through banks (except small finance banks and payment banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd.

A total of Rs 25,702 crore has been raised through the SGB Scheme since its inception till end-March 2021. The RBI had issued 12 tranches of SGB for an aggregate amount of Rs 16,049 crore (32.35 tonnes) during 2020-21.

The scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings -- used for the purchase of gold -- into financial savings.

Price of bond is fixed in Indian rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Ltd for the last 3 working days of the week preceding the subscription period.

The bonds will be denominated in multiples of gram(s) of gold with a basic unit of one gram. The tenor of the bond will be for a period of 8 years with exit option after 5th year to be exercised on the next interest payment dates.

Minimum permissible investment is one gram of gold. The maximum limit of subscription is 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal (April-March).

The know-your-customer (KYC) norms will be the same as that for purchase of physical gold.

The scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings -- used for the purchase of gold -- into financial savings.