Government expects fifth SGB scheme to raise over Rs 820 crore
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, mobilised through over 2.00 lakh applications representing around 2.37 tonnes of gold, realised through the 5th Tranche of SGB Scheme is expected to cross Rs. 820 crore.
These numbers are likely to go up as the receiving offices are still in the process of uploading information of huge rush of applications received on the last day, the ministry said in its release.
The aggressive marketing of the product by the central government, including through its receiving offices, namely banks, post offices, NSE and BSE, helped in mobilizing such an encouraging response.
SBI at Rs. 245 crore subscription and Bank of India at Rs. 56 crore subscription were the top performers.
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 issue price of the Sovereign Gold Bond for the 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).
In pursuance of the announcement in the Union Budget 2015-16, the 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 1-9, 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.
Advantages of SGB Scheme over physical gold includes its 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 cent per annum, semi-annually payable on initial investment.
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