Reserve Bank of India sets sovereign gold bond issue price at Rs 6,199/gram

The Reserve Bank of India (RBI) on Friday announced that the issue price for the next tranche of Sovereign Gold Bond has been fixed at Rs 6,199 per gram and will open for subscription on December 18 for five days.

The Sovereign Gold Bond (SGB) Scheme 2023-24 - Series III will be open for subscription during December 1822, 2023.

The SGBs will be sold through scheduled commercial banks (except small finance banks, payment banks and regional rural banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

In a statement, the RBI said the nominal value of the bond based on the simple average closing price for gold of 999 purity works out to Rs 6,199 per gram.

The central government, in consultation with the Reserve Bank, has also decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and making the payment through digital mode.

"For such investors, the issue price of Gold Bond will be Rs 6,149 per gram of gold," the central bank said.

The Gold Bond Scheme 2023-24 - Series IV is scheduled for February 12-16.

Series I was open for subscription on June 19-23 this year, and Series II during September 11-15.

The investors are compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.

The maximum limit of subscription shall be 4 kg for individuals, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal year.

The finance ministry said the tenor of the SGB will be eight years with an option of premature redemption after the fifth year to be exercised on the date on which interest is payable.

The Reserve Bank of India issues the bonds on behalf of the central government.

The bonds can be used as collateral for loans.

Know Your Customer (KYC) norms will be the same as that for the purchase of physical gold.

The sovereign gold bond scheme was launched in November 2015 with the objective to reduce the demand for physical gold and shift a part of the domestic savings -- used for the purchase of gold -- into financial savings.