First tranche of sovereign gold bonds to open for subscription from June 20th

17 Jun 2022 , 09:05 AM

The Reserve Bank of India announced on Thursday (16-06-2022) that the first tranche of the Sovereign Gold Bond (SGB) for 2022-23 will be available for subscription for five days starting June 20.

The second tranche (2022-23 Series II) will be available for subscription from August 22 to 26, 2022, according to the RBI.

The bonds are issued on behalf of the Indian government by the central bank, and they may only be purchased by residents, Hindu Undivided Families (HUFs), trusts, universities, and charitable organizations.

“The SGB would have an eight-year tenor with the option of early redemption after the fifth year on the day on which interest is payable,” the RBI said, adding that the minimum allowed investment will be one gram of gold.

SGBs were issued in ten tranches for a total of Rs 12,991 crore in 2021-22. (27 tonnes). Individuals have a maximum subscription limit of 4 kg, HUFs have a maximum subscription limit of 4 kg, while trusts and similar companies have a maximum subscription limit of 20 kg every fiscal year.

The RBI further said that the price of SGB will be determined in rupees using a simple average of the past three working days of the week preceding the subscription period, as reported by the India Bullion and Jewellers Association Limited (IBJA). For investors who subscribe online and pay via digital means, the issue price of the SGBs would be reduced by Rs 50 per gram.

The central bank stated, “Investors would be reimbursed at a predetermined rate of 2.5 percent per annum payable semi-annually on the nominal value.”

Banks, the Stock Holding Corporation of India Limited (SHCIL), the Clearing Corporation of India Limited (CCIL), post offices, and the two stock exchanges all sell SGBs (NSE and BSE).

The sovereign gold bond program was introduced in November 2015 with the goal of reducing physical gold demand and shifting a portion of domestic savings (which were previously used to buy gold) into financial savings.