Retail investors have reacted well to government’s sovereign gold bond (SGB) scheme, with the four tranches raising funds to the tune of Rs.2,240 crore. The total number of applicants reached its highest at 316,000 during the second tranche and the fourth tranche became the most successful, garnering Rs.919 crore. The Centre is set to issue its fifth tranche on 1 September.
An SGB is a government security, issued by the Reserve Bank of India (RBI) on behalf of the government. Investors can buy these instead of physical gold. They have to pay the issue price in cash and the bonds can be redeemed in cash on maturity. The bonds are denominated in multiples of grams of gold, with a basic unit of 1 gram. The issue price of 1 unit is equal to the price of 1 gram of gold.
