NEW DELHI: The fifth tranche of the Sovereign Gold Bond scheme for the current financial year will open for subscription on Monday (August 3) and close on August 7, according to the relevant notification from the Reserve Bank of India (RBI). While the gold bond scheme has seen relative success in attracting investments so far, the current surge in gold prices may force many investors away this time around.
According to the notification from the central bank, the issue price of the gold bond will be Rs 5,284 per gram for online subscribers, coming on the back of a nearly 40 per cent surge in gold prices till date this year. The Sovereign Gold Bond Scheme 2020-21-Series V will be denominated in multiples of grams of gold with the basic unit being one gram.
Sovereign gold bonds are issued by RBI on behalf of the Government of India and these bonds are government securities denominated in grams of gold. These bonds act as an alternative to actual buying of physical gold. In April this year, the RBI had announced that Sovereign Gold Bonds (SGBs) for the fiscal year will be issued in six tranches beginning April 20 till September.
The next tranche (Series VI) will open for subscription on August 31, 2020 and close on September 4. The terms set the tenor at eight years with an exit option after the fifth year. The bonds will be sold through banks, designated Post Offices, Stock Holding Corporation of India Ltd. (SHCIL) and the stock exchanges either directly or through their agents. The redemption price will be based on the then prevailing gold rates—an average of the closing price of 999 purity gold for the previous three business days, published by the India Bullion and Jewelers Association Limited.
Eight-year tenor, exit option after fifth year
The terms of the bonds set the tenor at eight years with an exit option after the fifth year. The bonds will be sold through banks, designated Post Offices, SHCIL and the stock exchanges either directly or through agents