Investors will have the option to buy sovereign gold bonds instead of physical gold. The Reserve Bank of India said : Applications will be accepted from November 4 to November 20, and the bonds will be issued on November 26, 2015.
The gold bonds will be denominated in a particular amount of gold and linked to the price of gold. Investors can buy 2 units or 2 grams and a maximum of 500 grams per fiscal year.
The public issue price has been fixed by the RBI at Rs.2,684 per gram.
Investors will receive a fixed rate of interest of 2.75 percent per year (payable every 6 months). the gold bonds will also be available in demat format and will have a maturity period of 8 years, with an exit option from the fifth year. The redemption price will be based on prevailing gold prices.
The gold bonds will be sold through banks and designated post offices.
One expert advises investors to keep their asset allocation in mind before putting their money into gold bonds as gold prices have been on a long term decline.