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Wednesday, January 26, 2022

Sovereign Gold Bond 2021-22 – Series IX opens today: All you need to know

The Government of India, in consultation with the central bank, has decided to offer a discount of Rs 50 per gram on the nominal value to those investors who will apply online and the payment against their application is made through digital mode.

By: Express Web Desk | New Delhi |
Updated: January 10, 2022 12:30:24 pm
Sovereign Gold Bond Scheme, Sovereign Gold Bond Scheme 2022The bonds are denominated in multiples of gram(s) of gold with a basic unit of one gram. (Representative image, source: Reuters/File photo)

The Sovereign Gold Bond Scheme 2021-22 – Series IX by the central government has opened for subscription today, January 10, 2022, and it will be available for five days until Friday, January 14, 2022. The Reserve Bank of India (RBI) has fixed the issue price at Rs 4,786 per gram.

Under this scheme, the RBI issues the bonds on behalf of the Government of India. The bonds are sold through banks, Stock Holding Corporation of India (SHCIL), designated post offices, and recognised stock exchanges – National Stock Exchange of India (NSE) and BSE.

The Government of India, in consultation with the central bank, has decided to offer a discount of Rs 50 per gram on the nominal value to those investors who will apply online and the payment against their application is made through digital mode.

“For such investors, the issue price of gold bond will be Rs 4,736 per gram of gold,” the RBI said in a statement on Friday.

The issue price for Series VIII, which was available for subscription from November 29–December 3 last year was Rs 4,791 per gram.

The price of the bond is fixed in Indian rupees on the basis of a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding the subscription period.

The bonds are denominated in multiples of gram(s) of gold with a basic unit of one gram. The tenor of the bond will be for a period of eight years with exit option after fifth year to be exercised on the next interest payment dates.

The minimum permissible investment is one gram of gold and the maximum limit of subscription is 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per financial year (April-March).

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

Speaking on the sovereign gold bond scheme, Nish Bhatt, Founder and CEO at Millwood Kane International, said, “SGB is an efficient way for investors looking to take exposure in gold. There is no storage cost, taxes as is the case in buying physical gold. Paper gold has a higher redemption value and can be easily used to take loans against it. SGB comes with a 2.5 per cent coupon attached and tax advantage for its investors.”

He further noted that the scheme has been a huge success for the government, as it has managed to raise over Rs 32,000 crores since its inception in 2015.

“Currently, gold prices are trading near a two-month low. Gold prices are almost Rs 9000/10 gm down from their peak witnessed in 2020. The weakness is mainly due to the minutes of the US Fed that indicated a faster rate hike and also a reduction in bond buying than earlier estimated,” Bhatt said in a statement.

Going forward, the pace at which the global central banks will unwind their monetary position, movement of the US dollar will guide gold prices in the year 2022, he noted.

-with PTI inputs

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