Centre to issue Sovereign Gold Bonds 2017-18 - Series II

The Centre in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds 2017-18 - Series II. Applications for the bond will be accepted from 10th to 14th of this month. The Bonds will be issued on 28th July and will be sold through banks, Stock Holding Corporation of India Limited, designated post offices and recognised stock exchanges National Stock Exchange of India Limited and Bombay Stock Exchange. The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions. 

The bonds will be denominated in multiples of grams of gold with a basic unit of 1 gram. The tenor of the bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates. Price of bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India



Bullion and Jewellers Association Limited for the week preceding the subscription period. 

The issue price of the Gold Bonds will be ` 50 per gram less than the nominal value. Payment for the Bonds will be through cash payment upto a maximum of 20 thousand rupees or demand draft or cheque or electronic banking. The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value. 

The bonds can be used as collateral for loans. The loan-to-value ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time. The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961. 

The bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI and it will be eligible for Statutory Liquidity Ratio purposes.