The Narendra Modi government will soon come out with the second issue of sovereign gold bonds. The first tranche saw a lukewarm response in November last year when the government managed to collect Rs 246 crore to issue bonds for 917 kg of gold.

The news of the second issue was conveyed by Shaktikanta Das, economic affairs secretary, Union Ministry of Finance. 

The scheme envisages issue of gold bonds at a predetermined rate fixed by the Reserve Bank of India and redeemable on the expiry of eight years from the date of issue.

The bonds carry an interest rate of 2.75% per annum, payable semi-annually.

The rate for the first tranche was fixed at Rs 2,684 per gram by the RBI.

The first tranche was open for subscription from 5 to 20 November and the bonds were issued on 30 November, 2015.

The gold bonds will be redeemed for cash at the end of the investment tenure at the prevailing gold price.

The scheme was launched by Prime Minister Narendra Modi on 5 November, 2015, along with two other gold schemes — Gold Monetisation Scheme and India Gold Coins — primarily to unlock gold held by households and institutions, estimated at about 20,000 tonnes.

India continues to be a high consumer of gold, though the country's gold imports have come down consistently over the years, from $56.5 billion in the 2011-12 fiscal, to $53.8 billion in 2012-13, to $27.70 billion in 2013-14.

It was $24.49 billion last year, and in this fiscal, the country imported gold worth $22.73 billion in the first eight months (April to November).

Gold smuggling, on the other hand, has been on the rise.

Smuggled gold seized at airports in India went up from Rs 557.83 crore in 2013-14 to Rs 832.08 crore in 2014-15. In the current fiscal till mid-November, the government has seized gold valued at Rs 429.84 crore, Union Finance Minister Arun Jaitley had informed the Lok Sabha in a written reply on 4 December.