The government is expected to realise more than Rs 820 crore through the 5th tranche of sovereign gold bond (SGB) scheme. This was mobilised through over two 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 the government through banks, post offices, NSE and BSE helped in mobilising 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 5thTranche of the SGB scheme was open from September 1 to 9. The government will come-up with more tranches in 2016-17. The next tranche of the scheme is expected around the third week of October, prior to Diwali
The sovereign gold bond scheme was announced in the union budget 2015-16 and launched as an alternative mode of investment to physical gold in November 2015. The aim of the SGB is to reduce demand, including through imports, for physical gold, and in process reduce India’s current account deficit.
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 like its use as collateral for loans, capital gain tax exemption on redemption, zero risk of theft or 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 cent per annum, payable semi-annually.