The Centre’s pet scheme, Sovereign Gold Bonds, has met with lukewarm response in the first tranche. The issue, which was open for two weeks, closed on Friday and is estimated to have collected only about ₹150 crore.

One reason for the tepid response is the correction that gold prices have seen in the last few weeks. On October 30, the Centre announced the face value of the gold bond as ₹2,684 per gram. But by the time the issue opened, prices in the market had dropped to ₹2,580 and by last Friday the metal was quoting at ₹2,548/gram, over 5 per cent below the price fixed for the gold bond.

With the bond promising an interest rate of 2.75 per cent, any one who invested in it essentially would have to wait for two years to make good the notional loss of investing at higher price. Distributors also highlight some procedural glitches as reasons for the weak response.

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