RBI announces subscription for 2nd tranche of sovereign gold bond scheme

RBI announces subscription for 2nd tranche of sovereign gold bond scheme
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The Reserve Bank of India determined the issue price for second tranche of sovereign gold bond scheme. The doors for subscription of gold bond was opened on Monday.

The window for issue of bonds will remain open by May 28th. GOI announced the issue of bond in six tranches from May to September to 2021.

Meanwhile, the transfer of power has been done by the government of India to the Central Bank.

The issue price for Rs. 4842 per gram of gold has been fixed by RBI for second tranche of sovereign gold bond scheme.

RBI on Sovereign Gold Bond

A statement issued by the RBI stated, “The nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period… works out to ₹4,842 per gram of gold.”

The investors who opt to apply online will be offered a discount of Rs. 50 per gram, less than the nominal value. Also, the payment for the application will be made via the digital mode.

Stock Holding Corporation of India Ltd (SHCIL), designated post offices, National Stock Exchange and the Bombay Stock Exchange (BSE) will be held responsible for selling bonds. In addition to the above Banks except small financial and payment banks are eligible to sell bonds.

The purchase of gold bonds can be done by Hindu Undivided Families (HUFs), trusts, individual residents and other charitable institutions. However investment on such will be limited.

The minimum and maximum investment considered will be 1 gram of gold and 4 kg of gold, respectively.

Maximum limit of subscription is assured as 4 kg for HUF and 20 Kg for trusts.
Bond tenure is fixed for the period of eight years. However an exit option is also proclaimed which allows exit in fifth year on the next interest payment dates.

The Government of India launched the sovereign gold bond scheme in November 2015. It was announced in consideration to decrease the demand for tangible gold. Also to transfer a part of domestic savings to financial investments.

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