The fifth tranche of sovereign gold bonds (SGBs) will open on Sept. 1. Encouraged by the response to the earlier rounds, the Narendra Modi government had said after the fourth tranche in July that it will come up with more tranches this fiscal. The fifth tranche will close on Sept. 9 and the price of gold per gm will be fixed in line with earlier rounds.
The fourth tranche saw a collection of Rs. 919 crore representing 2,950 kg of gold. The price per gm of gold was fixed at Rs.3,119. The overall collection in four tranches was Rs. 2,292 crore representing 8,064 kg of gold.
The announcement regarding the fifth tranche was made on Tuesday.
"The Reserve Bank of India, in consultation with the Government of India, has decided to issue fifth tranche of sovereign gold bonds. Applications for the bond will be accepted from September 01, 2016 to September 09, 2016. The Bonds will be issued on September 23, 2016," the RBI said in a statement.
"The bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange," the central bank statement added.
The gold bonds will have a tenor of eight years with an exit option from the fifth year.
Key details of the fifth tranche (according to the RBI):
The bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
Applications for the bond will be accepted from Sept. 1 to 9, 2016.
The bonds will be issued by the RBI on behalf of government of India.
The bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.
Price of the bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the week (Monday to Friday) preceding the subscription period.
The bonds will be issued on Sept. 23, 2016.
Investors will be compensated at a fixed rate of 2.75 per cent per annum payable semi-annually on the initial value of investment.
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 bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
Bonds will be trade-able on stock exchanges/ NDS-OM within a fortnight of the issuance on a date as notified by the RBI.