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Sovereign gold bond issue to open for subscription on Aug 31; here's all you need to know

BusinessToday.In     August 29, 2020

The sixth tranche of the Sovereign Gold Bond (SGB ) Scheme will open for subscription on August 31, according to the Reserve Bank of India (RBI). The gold bond has been priced at Rs 5,117 per gram.

However, the issue price has been fixed at Rs 5,067 per gram of gold for those investors who will apply online or make payment via digital mode. The RBI in consultation with the Centre has decided to offer a discount to such investors.   

Sovereign Gold Bond (SGB) 2020-21 is issued by the RBI on behalf of the government of India. The subscription for SGB scheme 2020-21- Seris VI will close on September 4.

The issue price for the bonds (series V) was Rs 5,334 per gram of gold. The Series V was open for subscription from August 3 to August 7.

Who can buy SGB 2020-21- Series VI?

The bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities and Charitable Institutions. The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal (April-March).

Where can SGB 2020-21- Series VI can be bought?

The Sovereign Gold Bonds can be bought from all banks (except small finance banks and payment banks), National Stock Exchange (NSE), the Bombay Stock exchange (BSE), Stock Holding Corporation of India (SHCIL), and designated post offices.

What is the lock-in period of Sovereign Gold Bonds 2020-21- Series VI?

The tenor of the SGB will be eight years with an exit option after the fifth year to be exercised on the interest payment dates. However, if an investor exits before the lock-in period of 5 years, they can always get out of the bonds by selling it on stock exchanges.

Why are Sovereign Gold Bonds issued?

The sovereign gold bond scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings, used for the purchase of gold, into financial savings.

What are gold prices at present?

On the Multi Commodity Exchange (MCX), October gold futures are at 51,448 per 10 gramme. On August 7, gold prices hit a record high of Rs 56,191.

As per the RBI Annual Report 2019-20, a total of Rs 9,652.78 crore (30.98 tonnes) has been raised through the Sovereign Gold Bonds Scheme (37 tranches) since its inception in November 2015.

The RBI issued 10 tranches of Sovereign Gold Bonds (SGBs) for an aggregate amount of Rs 2,316.37 crore (6.13 tonnes) during 2019-20.

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