November 23, 2015

GoBoSo fails to glitter

The government's much touted sovereign gold bond scheme has failed to cut much ice with the public, say bankers, who also blame the high issue price as the biggest dampener.

Public sector bankers whom PTI spoke to also attributed the many market holidays and affinity of the public towards physical gold for the subdued demand for ambitious sovereign gold bond scheme, which was the maiden offering by the government so far.

Although the Reserve Bank of India has not formally disclosed the overall funds collected under the scheme, bankers have pegged it at around Rs 150 crore.

"The primary reason for this lower-than-expected collection is the higher issue price. The RBI had set it at Rs 2,684 a gram, whereas the market price was lower. Why should somebody buy at higher price?" said a senior banker from a state-run bank.

He said his bank was targeting around Rs 50 crore from the scheme but could only collect one-tenth of it.

Market experts also vouched this, saying 4-5 per cent premium on the market price is not acceptable to a buyer, therefore the dismal demand.

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