The Reserve Bank of India (RBI) will issue the second tranche of the government's sovereign gold bond scheme on February 8 and will allow applications for the bonds from January 18-22. The bonds will be issued at an interest rate of 2.75 per cent payable on the initial amount of investment, according to the official press releases from the finance ministry and the central bank.
The bonds will be sold through banks, the Stock Holding Corporation of India (SHCIL) and designated post offices, RBI said. The borrowing through the bonds will form part of the government's market borrowing programme.
The first tranche of gold bonds saw a massive response from investors. Applications for the first tranche were kept open for 15 days from November 5 to November 20, 2015. It attracted 62,169 applications for 916 kg of gold amounting to Rs 246 crore of investments.
The second tranche issue will be kept open only for five days. The shorter duration issue will help avoid price variations in issue price and market price. In first tranche, when the issue had closed, market prices were almost five per cent lower than the issue price.
While the issue price is not declared, if the bonds were to be priced today, they would be at around Rs 2,600 per one gram gold based on the formula for calculating the bond issue price.
The second tranche of the scheme will have the same tenure as the first tranche of eight years and an exit option from the fifth year onwards. The bonds will be denominated in multiples of grams with the minimum allowable holding by an investor being two gram and the maximum being 500 gram.
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