The Central government will issue Sovereign Gold Bonds (SGB) 2018-19 for public subscription from October 15-19 at an issue price of Rs 3,146 per gram of gold.

SGBs are denominated in multiples of gram of gold with a minimum unit of one gram and can also be held in demat form.

For representational purposesReuters/Leonhard Foege

"Government of India in consultation with the Reserve Bank of India, has decided to allow a discount of Rs 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode," the Finance Ministry said in a statement.

For such investors the issue price of Gold Bond will be Rs 3,096 per gram of gold, it added.

According to another statement earlier this week, bonds would earn an interest of 2.5 percent per annum, payable every six months on the nominal value. The bond certificates would be issued on October 23.

"Price of the bond will be fixed in Indian rupees on the basis of a simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Ltd for the last three working days of the week preceding the subscription period," it said.

As per the statement, the tenure of the bond will be for a period of eight years, with an exit option from the fifth, sixth and seventh year, to be exercised on the interest payment dates.

The Sovereign Gold Bonds will be issued every month from October 2018 to February 2019.

The bonds would be sold through banks, designated post offices, Stock Holding Corporation of India (SHCIL) and recognised stock exchanges -- the National Stock Exchange and the Bombay Stock Exchange.

The government launched the Sovereign Gold Bond Scheme in November 2015 as an alternative to purchasing metal gold and mobilise the idle gold held by households and institutions into productive use in the long run.

The scheme envisages to reduce the current account deficit by reducing the country's reliance on the import of gold to meet the domestic demand.