With the new tranche of sovereign gold bond (SGB) scheme to open on Monday, top bourse BSE will offer purchase of the bullion units in physical form, a move which could help boost transaction volumes. So far, investors were allowed to hold SGBs in dematerialised (demat) or electronic mode.
The Reserve Bank of India (RBI) has fixed the price of sovereign gold bonds at Rs 2,780 per gram, which will open for public subscription from July 10-14.
"Trading members will be able to place bids for physical mode for their clients to hold SGB units in non-demat form," the BSE said in a circular.
"This will be in addition to the existing bid entry in demat mode through the iBBS system - the exchange's existing web-based online bidding platform for IPO, offer for sale, offer to buy issues," it added.
As per BSE guidelines, investors who wish to subscribe to SGB units in physical certificate form (i.E. In non-demat mode) need to approach their broker along with funds.
"The trading member (broker) can take either PAN/TAN/ Passport/Aadhaar card or Voter ID any one of the document and BSE application form from client who is interested in placing bid in physical mode," the stock exchange said.
The BSE added that the brokers have to ensure that KYC (know-your-client) details are complied with as well as recorded the prior consent of its clients.
After completing document verification, members would have to enter bid details in the exchange's iBBS system following which a unique bid number would be generated.
"Members can view status of the bids in the order book of the SGB module in iBBS system as per the bid confirmation process timeline," the exchange said.
Besides, the BSE said the trading members have to preserve the application form submitted by clients for all bid entered in the system till the bonds are matured and are repaid.
The SGB scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings, used for purchase of gold, into financial savings.
The government has so far issued eight tranches of SGBs and mobilised Rs 5,400 crore.
Under the scheme, the bonds are denominated in units of one gram of gold and multiples thereof. Minimum investment in the bonds is one gram with a maximum limit of subscription of 500 grams per person per fiscal year (April-March).
Besides the exchanges BSE and NSE, the bonds will be sold through banks, Stock Holding Corporation of India Ltd and designated post offices.