Third tranche of gold bond scheme estimated to raise 1,128 kg of gold

The third tranche of the Sovereign Gold Bond (SGB) from 8 to 14 March 2016, received more than 64,000 applications for a total subscription of 1,128 kg of gold amounting to Rs329 crore as per initial estimates. The bonds are to be issued issued on 29 March 2016.

The actual figure may vary as comprehensive information from all the authorised receiving agencies is under compilation. These bonds will be issued on 29 March  2016.

The top receiving agencies in terms of subscription amount are SBI, Bank of India, Indian Bank, ICICI Bank, Punjab and Sind Bank, HDFC Bank, Canara Bank, Andhra Bank, PNB, Union Bank of India and Central Bank of India.

The third tranche of SGB shows demand for the scheme gradually picking up amongst investors with increase in awareness and more clarity about the provisions of the scheme.

The bond were kept open for sale from 8 to 14 March 2016. Economic affairs secretary Shaktikanta Das held a review meeting through video conferencing with the banks in the national capital before the opening of the issue. To increase the awareness amongst potential depositors, the government had also launched a media campaign through AIR, FM radio, print media, mobile SMS, Facebook and Twitter.

The first tranche of SGB was issued in November 2015 and banks and post offices had received 62,169 applications for a total subscription of 915.953 kg of gold, worth Rs246.20 crore.

In the second tranche of SGB from 18 January 2016 to 22 January 2016, approximately 31.6 million applications were accepted for a total subscription of 2,872.3 kg of gold worth Rs746.80 crore by the banks and post offices.

Earlier, the government of India had launched the Sovereign Gold Bond (SGB) Scheme on 5 November 2015. The objective of the scheme is to reduce the demand for physical gold and shift a part of the domestic savings used for purchase of gold, into financial savings.

Sovereign gold bonds are issued on behalf of government of India in tranches by RBI, from time to time, on payment of the required amount in rupees. The Bonds are denominated in grams of gold and are restricted for sale to resident Indian entities including individuals, HUFs, trusts, universities, charitable institutions.

The minimum permissible investment is two grams of gold, value of which is to be paid in rupees. The maximum amount which could be subscribed is 500 grams per person per financial year. Government has fixed the rate of interest on gold bonds for the year 2015-16 as 2.75 per cent per annum, payable on half yearly basis.

The tenor of the bond is for a period of 8 years with exit option from fifth year onwards. On maturity, the investor will get the equivalent rupee value of the quantum of gold invested at the then prevailing price of gold. Exemption, from capital gains is available at redemption.