FinMin likely to issue 5th tranche of gold bonds next month

New Delhi, Aug 17 (PTI) Seeking to contain physical golddemand, the government is likely to issue fifth tranche ofsovereign gold bond (SGB) scheme next month. "We are working on some changes with a view to making itmore attractive. The next tranche should be issued inSeptember," a senior Finance Ministry official said. In the previous tranche, the government made some changesto make it more attractive and its positive result was visiblein terms of mobilisation, the official added. Last month, the government had realised Rs 919 crorethrough the fourth tranche — the highest so far. The previous highest was Rs 746 crore, which was realisedin the second tranche when the issue price was Rs 2,600 pergram of gold. In the previous round, the issue price was fixed atRs 3,119. This time around, the amount was mobilised throughover 1.95 lakh applications representing around 2.95 tonnes ofgold. In the Union Budget 2015-16, the SGB scheme was launchedas an alternative to storing physical gold. Launched in November 2015, the aim of SGB is to reducedemand, including through imports, for physical gold, and inprocess reduce India’s current account deficit (CAD). Apart from the three tranches in 2015-16, the governmentin consultation with RBI launched the fourth one, which wasopen on July 18-22. To improve attractiveness of the scheme, new features wereintroduced in the latest instalment, where the minimumsubscription limit was brought down to 1 gm, from 2 gm. The capital gains tax arising out of redemption stoodexempted, in line with the Budget 2016-17 announcement, saidthe ministry. This exemption was extended to the other threetranches, too. The product earns an interest rate of 2.75 per cent perannum, payable half yearly on initial investment. The government allowed the applications to be routedonline and the scheme was issued by way of demat or paper. Market exchanges BSE and NSE were notified as additionalreceiving offices and trading of gold bonds was alsooperationalised. PTI DPARD

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