Press Information Bureau
Government of India
Ministry of Finance
14-January-2016 20:51 IST
Government, in consultation with the Reserve Bank of India, decides to issue Second Tranche of Sovereign Gold Bonds Scheme 2016; Applications for the bonds to be accepted from 18th January to 22nd January, 2016; Bonds to be issued on February 8, 2016 and will be sold through banks, Stock Holding Corporation of India Limited (SHCIL) and designated post offices.
The Government of India, in consultation with the Reserve Bank of India, has decided to issue second tranche of Sovereign Gold Bonds. Applications for the bonds will be accepted from January 18, 2016 to January 22, 2016. The Bonds will be issued on February 8, 2016. The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL) and designated post offices. The borrowing through issuance of the Bond will form part of market borrowing programme of the Government of India.
It may be recalled that Honourable Finance Minister had announced in Union Budget 2015-16 about developing a financial asset, Sovereign Gold Bond, as an alternative to purchasing metal gold. Accordingly, the first tranche was open for subscription from November 05, 2015 to November 20, 2015. The features of the Bond are given below:
| Sl. No | Item | Details |
| 1 | Product name | Sovereign Gold Bond 2016 |
| 2 | Issuance | To be issued by Reserve Bank India on behalf of the Government of India. |
| 3 | Eligibility | The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, trusts, Universities and charitable institutions. |
| 4 | Denomination | The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram. |
| 5 | Tenor | The tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates. |
| 6 | Minimum size | Minimum permissible investment will be 2 units (i.e. 2 grams of gold). |
| 7 | Maximum limit | The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained. |
| 8 | Joint holder | In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only. |
| 9 | Frequency | The Bonds will be issued in tranches. Each tranche will be kept open for a period to be notified. The issuance date will also be specified in the notification. |
| 10 | Issue price | Price of Bond will be fixed in Indian Rupees on the basis of the previous week’s (Monday–Friday) simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd. (IBJA). |
| 11 | Payment option | Payment for the Bonds will be through cash payment upto a maximum of Rs. 20,000 or demand draft or cheque or electronic banking. |
| 12 | Issuance form | Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate. The Bonds are eligible for conversion into demat form. |
| 13 | Redemption price | The redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA. |
| 14 | Sales channel | Bonds will be sold through banks, SCHIL and designated Post Offices, as may be notified, either directly or through agents. |
| 15 | Interest rate | The investors will be compensated at a fixed rate of 2.75 per cent per annum payable semi-annually on the initial value of investment. |
| 16 | Collateral | Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time. |
| 17 | KYC Documentation | Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. |
| 18 | Tax treatment | The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961) and the capital gains tax shall also remain same as in the case of physical gold. |
| 19 | Tradability | Bonds will be tradable on exchanges/NDS-OM from a date to be notified by RBI. |
| 20 | SLR eligibility | The Bonds will be eligible for Statutory Liquidity Ratio. |
| 21 | Commission | Commission for distribution shall be paid at the rate of 1% of the subscription amount. |
Finance Minister Shri Arun Jaitley: Asks all the banks to make their best efforts to reach-out to potential investors to invest in the Second tranche of the Sovereign Gold Bonds which will be kept open from 18th January, 2016 to 22nd January, 2016
The Union Finance Minister Shri Arun Jaitley asked all the banks to make their best efforts to reach-out to potential investors to invest in the Second tranche of the Sovereign Gold Bonds which will be kept open from 18th January, 2016 to 22nd January, 2016. He said that this is an attractive opportunity for the investors. The Finance Minister was addressing the CMDs of the banks through video conferencing here today. He also discussed the banks’ preparedness for the second tranche of the Sovereign Gold Bond Scheme. He said that the Government is keen to expand the scheme in the subsequent tranches as well. This was followed by a review by Shri Shaktikanta Das, Secretary, Department of Economic Affairs (DEA) with all the CMD’s of the Banks. All the banks assured to activate their branch network to inform the investors about the advantages of the bonds.
To increase the awareness among depositors, the Government is continuing with the Media campaign on AIR and FM radio, in print media and through Mobile SMS campaign. Information is also available on the website www.finmin.nic.in/swarnabharat and on the toll free number 18001800000.
The First Tranche of Sovereign Gold Bond (SGB) was issued on behalf of the Government of India by RBI at the branches of scheduled commercial banks and designated post offices through its e-kuber system from 5th November, 2015 to 20th November, 2015 . A total of 62169 applications were received for a total subscription of 915.953 Kilograms of gold amounting to Rs 246.20 Cr by the Banks and Post Offices.
Earlier, the Government had launched Sovereign Gold Bond on 5th November, 2015. The main objectives of the scheme is to reduce the demand for physical gold and shift a part of the gold imported every year for investment purposes into financial savings through Gold Bonds.
Sovereign Gold Bonds are issued by RBI on behalf of the Government of India on payment of the required amount in rupees and are denominated in grams of gold. The Bonds are restricted for sale to resident Indian entities including individuals, HUFs, trusts, Universities, charitable institutions. Minimum permissible investment is 2 grams of gold to be paid in rupees. The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). Government has fixed the rate of interest for the year 2015-16 as 2.75 % per annum , payable on a half yearly basis. The bonds will be available both in demat and paper form. The rate for the Bonds will be fixed on the basis of simple average of closing price for gold of 999 purity of the previous week published by the India Bullion and Jewellers Association (IBJA). These bonds will be available at Banks and Post Offices. The tenor of the Bond will be for a period of 8 years with exit option from 5th year onwards to be exercised on the interest payment dates. KYC norms will be the same as that for gold. Exemption from capital gains tax will also be available. On maturity, the investor will get the equivalent rupee value of the quantum of gold invested at the then prevailing price of gold.
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