In an overwhelming response to the government's gold bond scheme, the first tranche has received 63,000 applications for 917 kg of the metal, worth £24.6 million, as per a senior government official. Economic affairs secretary Shantikanta Das called it an “excellent response for an innovative product”. The issue date of the scheme was shifted to November 30 from November 26 to enable smooth uploading of applications into the RBI's e-Kuber system, the government said.
The finance ministry said, “This overwhelming response has been received from the retail investors who are the focus of this scheme. This new and innovative saving instrument has elicited response from across the country and it is expected that subsequent tranches will continue to receive such enthusiastic response.”
The RBI, in consultation with the government, decided to issue sovereign gold bonds. The bonds were sold through banks and designated post offices. Raising money through the bonds will form part of the market borrowing programme of the government. Finance minister Arun Jaitley had announced the sovereign gold bond scheme in the 2015-16 budget, aimed at developing a financial asset as an alternative to purchasing metal gold. The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1gram. The tenor of the bond is for eight years with an exit option from the fifth year. The exit option will be exercised on the dates when interest is paid. Minimum permissible investment is 2 units (2 grams of gold) and the maximum amount will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained. The investors will be compensated at a fixed rate of 2.75% per annum payable semi-annually on the initial value of investment.
In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only. The bonds will be issued in tranches. Each tranche will be kept open for a period to be notified. The bonds are eligible for conversion into demat form. The redemption price will be in rupees based on the previous week's (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
