Govt to make next gold bond investor-friendly

The sixth tranche of the issue is expected to open on October 24

The sixth tranche of the sovereign gold bond issue, third in the current financial year, will have several new features for investors.

Sources said the government planned to improve the terms on ease of investing, to make it simple to understand, easy to encash and easy to invest.

In the previous issue, the minimum investment quantity was made a minimum of one gramme and its multiples. Those investing through banks can also buy the bonds online and get them in demat form. They're also listed on the stock exchanges but trading is thin and brokers not so active. Those buying through banks directly without having demat facilities might find it difficult to encash, as only demat bonds can be sold on the stock exchanges. Market players say such investors need an alternative mechanism to make their bonds liquid.

Also, bank forms are held to be asking for too many details. The department of economic affairs had a meeting with banks on how to simplify this. All post offices are also not accepting applications.

Since last November, five tranches of bonds have been issued and a total of a little over 10 tonnes equivalent were issued The total amount collected was Rs 3,060 crore.

The next bond issue is expected to open on October 24, and if prices remain around the current level, the price could be Rs 3,000 a gramme.

The bonds carry a 2.75 per cent annual interest rate and there is no physical gold involved at the time of buying or repayment. The bonds are free from capital gains tax at maturity. The past four issues have been listed on stock exchanges and are traded at a slightly better price than the one at issue.