The government’s ambitious Sovereign Gold Bond (SGB) Scheme received investments to the tune of Rs.1,085 crore in its sixth tranche, according to a report by the RBI. These were offered under Series 3 of the scheme, with applications accepted between October 24 and November 2, 2016.
Each bond was issued at a price of Rs.2,957 per gram, a Rs.50 per gram discount on the actual value of each bond.
While each bond was cheaper to buy in this tranche, the government also reduced the interest rate, bringing it down to 2.5 per cent per year. This rate was 2.75 per cent previously.
Implemented in 2015, the Sovereign Gold Bond Scheme provides government securities to investors. Each bond is equivalent to a gram of gold, essentially becoming an alternative to owning physical gold. The Reserve Bank of India issues these bonds on behalf of the government, with the bond having a tenor of eight years.
Individuals subscribed to bonds equivalent to 3,550 kg of gold in this tranche, with the interest paid on the 17 of May and November each year.
|Date of issue||Issue price (Rs.)||Amount collected (Rs.)||Quantum of gold (kg)|
|1st Tranche||26 Nov, 2015||2,684||246||916|
|2nd Tranche||8 Feb, 2016||2,600||798||3,071|
|3rd Tranche||29 March, 2016||2,916||329||1,128|
|4th Tranche||5 Aug, 2016||3,119||919||2,950|
|5th Tranche||30 Sep, 2016||3,150||768||2,435|
|6th Tranche||17 Nov, 2016||2,957 (Rs.50 discount from actual issue price of Rs.3,007)||1,085||3,550|
The government recently issued gold bonds under the seventh tranche, with each bond costing Rs.2,893. With the government making it mandatory for the PAN to be produced before buying gold exceeding Rs.2 lakh, investors could find this scheme more viable compared to owning physical gold.