The government will launch the next tranche of sovereign gold bonds on April 24 —the first this fiscal — offering a 2.5% tax-free annual interest to investors. Applications for the bond will be accepted from April 24 to April 28, the finance ministry said on Thursday. The bonds will be issued to eligible applicants on May 12. The investors will get the interest payable semi-annually on the nominal value of investment. The latest tranche of bonds is part of the government’s efforts to garner as much as Rs 5,000 crore from all the three gold schemes this fiscal. The sovereign gold bond, gold monetisation scheme and Indian gold coin were launched by Prime Minister Narendra Modi in late 2015, as the government wanted to discourage imports of the precious metal and curb their debilitating impact on trade balance.
The gold schemes are still far from a roaring success. The government had budgeted to mop up Rs 10,000 crore from the three schemes in 2016-17 but had to settle at Rs 3,809 crore in the revised estimate that is equivalent of just around 2% of the country’s annual consumption. Nevertheless, the schemes provide more choices to investors and could potentially be a massive success if they are designed even better and once investors are made aware of their many benefits, say analysts.
The Budget has set a target of Rs 5,000 crore from these gold schemes for 2017-18. In 2015-16, compared with Rs 3,809 crore in the current fiscal and Rs 1,318 crore in 2015-16. The bonds will be sold through banks, Stock Holding Corporation of India, designated post offices, the National Stock Exchange and the Bombay Stock Exchange. The tenor of the bonds will be for a period of eight years, with exit option from fifth year to be exercised on the interest payment dates, according to the statement. Payment for the bonds will be through cash (but only up to a maximum of Rs 20,000) or demand draft or cheque or electronic banking.