The Government of India will raise funds by issuing Sovereign Gold Bonds. Further, The RBI told that gold bonds would be released in Six tranches. The effective date of the issue is 20 April.
The government of India, with the help of the Reserve Bank of India (RBI), will be issuing Sovereign Gold Bonds 2020-2021. Moreover, the gold bonds offered at a fixed rate of 2.50 percent per annum. The interest will be payable semi-annually on the nominal value.
The Central Bank informed these Gold bonds will be restricted to sale. It is only for Individuals, HUFs, Charitable Institutions, Universities, and Trust.
The RBI will be issuing these bonds in the denomination of gram(s) with the minimum unit of 1gram. The tenure of these bonds will be for eight years. Exit option can be exercised after completing five years. After completing the fifth year, it needs to be applied to interest payment dates.
The sovereign gold bonds purchased through banks (except payment banks and small finance banks). Apart from banks, even designated post offices, stock holding corporation of India and recognized stock exchanges would issue the same.
In India, the Sovereign Gold bond scheme was first introduced in November 2015. The motive of introducing this scheme was to reduce the demand for physical gold. However, investors should be careful, as liquidity in these bonds is not high.