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Sovereign Gold Bonds By RBI.

30 December, 2020 - By Bhanu

The Sovereign Gold Bonds will be available for subscription from today. The government of India in consultation with the Reserve Bank of India had decided to issue the bonds in six tranches from October 2020 to March 2021.

The RBI issued 10 tranches of sovereign gold bonds for an aggregate amount of Rs 2,316.37 crore (6.13 tonnes) during 2019-20.

The subscription for Series IX of the Sovereign Gold Bonds 2020-21 as part of third tranche starts today and can be done till January 01, 2021. The issue price for the bonds is Rs 5,000 on the basis of simple average closing price of gold of 999 purity as published by the India Bullion and Jewellers Association Limited for the last three working days of the week preceding the subscription period, December 22-24. RBI has also said that the issue price will be Rs 50 per gram less for investors applying online and making payments digitally.

Investors can buy the bonds through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges, National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

The minimum permissible investment limit is for 1 gram of gold. The bonds have the tenor period of 8 years with an exit option after fifth year to be exercised on the next interest payment dates. RBI says, the investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value. The bonds are for sale only to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions. Individuals and HUF can invest in maximum 4Kg, while trusts and similar entities can invest in 20 Kg per fiscal (April-March) notified by the Government from time to time.

The objective for this scheme is to shift the demand for the bullion from physical gold for domestic purposes to financial savings. The prospects for the yellow metal are shining bright for next year. The rate of gold is expected to rise to Rs 63,000 per 10 grams next year as it gains on the back of fresh stimulus in the US and weakening American dollar. HDFC securities Senior Analyst (Commodities) Tapan Patel told PTI said gold is likely to remain bullish next year with targets of Rs 57,000 and Rs 63,000 at MCX on concerns over global economic recovery. Given the gold’s socio-economic role it is often considered a safe haven for investors and this support for gold is expected to rise next year.

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