Purchase Price Of Gold Bonds Sliced

This is in a bid to prevent outflow of gold from its coffers. The central bank has offered to buy back the gold bonds maturing in 1998. On maturity of the paper, the RBI has to return the underlying gold to the bond holders.

On October 3, 1996, the apex bank put the gold bonds 1998 on its purchase window at a price of Rs 4,408.10. One bond represents an ounce of underlying gold. If a bond holder sells the bonds back to the RBI and takes cash, the underlying gold will not go out of the apex banks coffers.

 

RBI has, however, offered to buy the gold bonds at a massive discount to the prevailing market price of gold. As against a market price of Rs 4,730 on October 3 for 22-carat gold, the RBI is buying the gold bonds at Rs 4,408.10. In fact, the market price of standard gold is Rs 5,115 for an ounce.

Sale or pledging of gold is used as the last resort to meet the countrys obligations as it was done in 1991 when Indias reserves fell to record low which could cover only two weeks of imports.

The gold bond scheme, 1993, was introduced for three months from March 15, 1993. The main objectives of the scheme was to mobilise the idle gold resources of ordinary citizens to supplement the official reserves.

The total subscription received was for 41.12 metric tonnes of gold. The revised estimates 1993-94 and the budget estimates 1994-95 assumed a receipt of Rs 375 crore and Rs 1,225 crore, respectively under this scheme against budget estimates 1993-94 of Rs 300 crore based on the progress and the programme of assaying and certification of the gold received.

The budget receipts of 1995-96 state that the revised estimates 1994-95 and the budget estimates 1995-96 assume a receipt of Rs 1,100 crore and Rs 65 crore, respectively against a Budget estimate of Rs 1,225 crore in 1994-95.

The 1996-97 Budget receipts state that the revised estimates of 1995-96 assumed a receipt of Rs 59.23 crore under this scheme against a budget estimate of 1995-96 of Rs 65 crore. Since the entire gold has already been assayed, no receipt is assumed in 1996-97.