look news india
Mumbai: The biggest hit of the significant reduction in import duty on gold in the current year's budget seems to be on Sovereign Gold Bond (SGB) investors. It can be said that investors who invested in the first series of SGB in August 2016 have suffered a loss of more than 4 percent in returns due to the reduction in duty.
For the SGB series maturing on August 5, 2024, the Reserve Bank has fixed the redemption price of one gram of .999 gold at Rs 6938.
The price of this SGB deposit issued on 5 August 2016 was fixed at Rs 3119 per gram of gold. Investors have been given 2.75 percent annual interest on this investment. This investment is giving a return of 122 percent.
The price announced by the Reserve Bank is 4.50 percent lower than the average price per gram of gold in the week before the budget presented on July 23. Gold prices have fallen sharply after the reduction in customs duty on gold in the budget.
The redemption price of SGB is decided based on the average price of the week preceding the date of redemption. The Reserve Bank considers the prices declared by the India Bullion and Jewelers Association (IBJA).
The maturity period of each installment of the SGB scheme is eight years. Before the budget was presented on July 23, the price of gold per ten grams was Rs 72932 on July 15, Rs 69602 on July 23 and Rs 70392 on August 2.
To reduce the demand for gold in the country, the government launched the SGB scheme for a period of eight years in November 2015. The possibility of not getting much return on SGB at a low price may reduce the attraction of investors towards the scheme. It is expected that the government may take a decision on this scheme next month.
