More than Rs. 820 crore expected to be realised through Fifth Tranche of Sovereign Gold Bond (SGB) Scheme
Press Information Bureau
Government of India
Ministry of Finance
22-September-2016 12:37 IST
More than Rs. 820 crore expected to be
realised through Fifth Tranche of Sovereign Gold Bond (SGB) Scheme from 1st to
9th September, 2016; This is mobilised through over 2.00 lakh applications
representing around 2.37 tonnes of gold; The next tranche of SGB Scheme is
expected around the third week of October, 2016, prior to Diwali, with
additional features to attract more consumers.
The amount
realised through the 5th Tranche of Sovereign Gold Bond (SGB) Scheme, is
expected to cross Rs. 820 crore. This was mobilised through over 2.00 lakh
applications representing around 2.37 tonnes of gold. These numbers are likely
to go-up further as the receiving offices are still in the process of uploading
information of huge rush of applications received on the last day. The
aggressive marketing of the product by Govt of India, including through its
receiving offices, namely Banks, Post Offices, NSE and BSE helped in mobilizing
such encouraging response. SBI at Rs. 245 Crore subscription and Bank of India
at Rs. 56 Crore subscription were the top performers. The Post Offices did
their bit by attracting maximum number, around 22,000, applicants. The total
mobilisation by Post Offices is expected at around Rs. 15-20 crore. The 5th
Tranche of Sovereign Gold Bond (SGB) Scheme was open from 1st to9th September,
2016.
The issue
price of the Sovereign Gold Bond in 5th tranche worked-out to a still higher
level Rs. 3,150 per gram of gold based on the average of closing price of gold
of 999 purity for the week August 22 to 26, 2016, as published by the India
Bullion and Jewellers Association Ltd. (IBJA).
The
Government will come-up with more tranches in 2016-17. The next tranche of SGB
is expected around the third week of October, prior to Diwali. The next tranche
is expected to come up with additional features to attract consumers even more.
In pursuance
of the announcement in the Union Budget 2015-16, the Sovereign Gold Bond (SGB)
scheme was launched as an alternative mode of investment to physical gold in
November 2015. The aim of SGB is to reduce demand, including through imports,
for physical gold, and in process reduce India’s Current Account Deficit.
Three
tranches of SGB scheme were floated in 2015-16. In the current financial year
two tranches have been launched (4th tranche from July 18-22, 2016 and 5th
tranche from September 01-09, 2016). The total subscription in first 4 tranches
was Rs. 2239 Crore corresponding to 7.85 tonnes of gold. The highest
mobilisation was Rs. 921 Crore in the 4th tranche when the issue price was Rs.
3119 per gram of gold.
The
sustained and encouraging response of the investors to the SGB Scheme (Series-I
and series-II) of 2016-17, indicates that the product has come of age, and is
increasingly becoming popular amongst the general public due to advantages it
offers over physical gold, namely use as collateral for loans, Capital Gain Tax
exemption on redemption, Zero risk of theft/ impurities associated with
handling of physical gold; tradability through Stock Exchanges and also
availability in DEMAT and paper form. The product, in addition, earns an
interest rate of 2.75% per annum, semi-annually payable on initial investment.