NEW DELHI:The government said the first tranche of the sovereign gold bonds (SGB) will open for public subscription on April 24. The issue price of the gold bonds will be Rs 50 per gram less than the nominal value and the bonds would earn an interest of 2.75 per cent per annum, payable every six months on initial investment, the finance ministry said in a statement. Investors will be compensated at a fixed rate of 2.50 per cent per year payable semi-annually on the nominal value.
The bonds will be sold through banks, Stock Holding Corporation of India Limited, designated post offices and recognised stock exchanges, NSE and BSE.
“With the latest issue of sovereign gold bonds one can safely assume that the response for the ‘paper gold’ has been increasing. The government will come up with more tranches going forward. However, the restrictions on entities which can sell this product remains a concern. If more companies, including NBFCs are allowed to sell the product the acceptance will be more,” said Harish V, Research Head, Geofin Comtrade.
The tenor of the bonds will be for a period of eight years with exit option from 5th year to be exercised on the interest payment dates. The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year and minimum is one gram.
“Gold bonds is an investment option for people who do not want to buy and keep physical gold. Stock and commodities brokers should be allowed to sell the product in order to make it popular,” said Akshay Agarwal, managing director, Acumen Capital Makret India Limited.
However, B Govindan, chairman of Bhima Jewellers, said that there should be easy options to monetise the product when needed like gold loan.