PANAJI: The fourth edition of Sovereign Gold Bonds is receiving a modest response from buyers, according to sources in Goa’s banking industry. Bankers said that the response is muted but they expect the demand to pick up on Friday, which is the last day when the issue closes.
One large public sector undertaking (PSU) bank said that it sold 500 grams of gold worth around Rs 15 lakh while another said that the sale was in the region of around five kg, so far. On the whole, bankers said that the subscription is lower than the previous (third) tranche.
“People are subscribing to the bonds but I can’t say that the subscription is high,” said an official in Canara Bank. It is a moderate kind of response, he
said, adding that a significant number of applications are likely to come in on Friday from customers, who have taken the forms.
Banks have been given firm targets by the government to push the bonds and bankers said that they are focused on selling. A senior source in Bank of India said that they are satisfied with the response although he admitted that collection is somewhat lower than seven kg logged in the previous edition.
“The bonds carry an interest rate of 2.75 per cent, which is a hedge against depreciation in price of gold and we are publicising that fact to the investors,” said the Bank of India source. He added that gold prices are bound to appreciate in five years, which is the lock-in period.
Gold rate is firmed up lately in the market but it is slightly lower than the issue price of the bond. It could be the reason for the soft response to the scheme, said one bank manager. The issue price of the Sovereign Gold Bond is fixed at Rs 3,119 per gram of gold and people are finding it high compared to Rs 2,600 per gram in the first tranche, he said. Banks feel that since Goa’s gold market is currently dull, it could also be a reason for the weak response to the bonds.
The fourth series of the Gold Bonds is from July 18-22. The bonds are sold through select branches of banks, designated post offices, Stock Holding Corporation of India and recognised stock exchanges.
In March 2016, the third edition of the scheme had received lukewarm response with the government getting subscription of 1,128 kg gold amounting to Rs 329 crore. Comparatively, the second tranche in January 2016 received subscriptions of 2,790 kg of gold for Rs 726 crore while the first tranche launched in November 2015 had received a subscription for 915.95 kg of gold worth Rs 246 crore.
With the scheme yet to close, bankers said that they have their fingers crossed on the subscription. The bonds are being issued with a minimum denomination of one gram.