Centre on Monday, fixed Rs 2,890 per gram as price of new series of sovereign gold bonds (SGBs). Interestingly, government which was in consultation with the Reserve Bank of India (RBI), has decided to offer a discount of Rs 50 per gram to investors who will apply online and make payments digitally. It is another step to boost PM Narendra Modi’s ‘Digital India’. “For the next subscription period December 11-13 of the Series III of Sovereign Gold Bonds 2017-18, the issue price shall be Rs 2,890 per gram with settlement on December 18,” a finance ministry statement said today. The issue price will be Rs 2,840 per gram for investors who apply online and choose to pay through digital mode.
The current round of bonds is part of the so SGBs calendar announced till December and is spread over 12 weeks. The subscription opens from Monday to Wednesday every week between October 9 and December 27. The settlement is to be made on the first business day of the following week. Under this plan, the bonds are denominated in units of one gram of gold. Notably, the minimum investment in the bonds is one gram and the maximum limit is of 500 grams er person, in a financial year (April to March).
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India. The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.