3.16 lakh applications received for sovereign gold bonds

New Delhi, Jan.29 (ANI): Banks in the country have confirmed receiving 3.16 lakh applications for the second tranche of sovereign gold bonds.

The total subscription so far is to the tune of 2,790 kilograms of gold valued at Rs. 726 crores, which is three times more than what was received earlier. The scheme was opened to the general public from January 18 to 22.

The trend during the second tranche of sovereign gold bonds (SGB) shows that the scheme is gradually picking up amongst the investors due to inreasing awareness and greater clarity about the provisions of the scheme," a government release has stated.

Finance Minister Arun Jaitley had earlier this month asked banks to make their best efforts to reach out to potential investors to invest in the second tranche of sovereign gold bonds.

AIR, FM radio, print, Mobile SMS, Facebook and Twitter are the various media used to spread awareness among potential depositors about the scheme.

The first tranche of SGB issued in November 2015 had seen 62,169 applications for a total subscription of 915.953 kilograms of gold amounting to Rs 246.20 crores.

Gold price for the second tranche was Rs.2,600 per gram against Rs.2,684 per gram in the first tranche which closed in November-end.

During the first tranche, which remained open for over three weeks, the market price of gold fell four percent below the issue price. During the second tranche, the market price of the metal-related bonds was seen to be rising. This was accompanied by aggressive selling by banks and helped the government get a better response.

The gold bonds are issued in denominations of 5 grams, 10 grams, 50 grams and 100 grams for a term of 5-7 years with a rate of interest to be calculated on the value of the metal at the time of investment. The scheme has an annual cap of 500 grams per person. This time, the share of applicants for smaller denomination gold bonds, were also higher.

"The objective of the scheme is to reduce the demand for physical gold and shift a part of the domestic savings used for purchase of gold into financial savings," it added.

To wean investors away from physical gold, Prime Minister Narendra Modi launched gold schemes on November 5.

The scheme is aimed at reducing demand for gold in physical form by encouraging people to buy the commodity in demat or the paper form.

During April-December this fiscal, gold imports increased to USD 26.45 billion as against USD 25.85 billion in the same period last year. The government has fixed the rate of interest on gold bonds for the year 2015-16 as 2.75 per cent per annum, payable on half yearly basis.

The second tranche of gold bond scheme, which opened for subscription on January 18, closed on January 22. The bonds would be alloted on February 8.

The top ten receiving agencies in terms of subscription amount are SBI, Indian Bank, Syndicate Bank, ICICI Bank, Bank of India , Punjab and Sind Bank, Andhra Bank , Canara Bank, PNB, and Central Bank of India, the finance ministry statement said.