Government is looking at raising Rs 15,000 crore in the current fiscal through the gold bond scheme, for which a cabinet note is likely to be moved for consideration later in the month.
The interest rate for the scheme, which was announced by Finance Minister Arun Jaitley in his budget speech, would be close to the rates on government securities, a senior official said.
“We are in talks with the RBI on it. The floor rate would be somewhere around the rates fetched by other government securities,” the official said.
The Finance ministry last month came out with a discussion paper on the sovereign gold bond scheme. It had suggested that the scheme be linked to the government borrowing programme.
“We are targeting to raise Rs 15,000 crore and the issuance would be for retail investors in tranches,” the official added.
The proposed scheme, which aims to shift part of the estimated 300 tonnes of physical gold bar purchased every year to demat gold bond, will be marketed through post offices and brokers on commission basis.
“The final contours and timing will be decided by the Public Debt Management Agency (PDMA), which is the RBI. The Finance Ministry will get a cabinet nod for it,” the official said.
He further said that if the scheme turns out to be a success it would be linked to government’s borrowing programme from the beginning of next fiscal.
The government plans to borrow Rs 6 lakh crore in current fiscal of which Rs 3.6 lakh crore would be done in first half. The government would be preparing the borrowing calender for the second half by September.
As regards taxation, the discussion paper said, capital gains tax treatment for the scheme would be the same as for physical gold.
The bonds will be issued in 2, 5, 10 grams of gold or other denominations, it said, adding that the tenor of the bond could be for a minimum of 5 to 7 years so that it would protect investors from medium-term volatility in gold prices.
In his Budget speech, Jaitley had said: “Though stocks of gold in India are estimated to be over 20,000 tonnes, most of this gold is neither traded, nor monetised. I propose to… Develop an alternative financial asset, a Sovereign Gold Bond, as an alternative to purchasing metal gold.”