The Reserve Bank of India has announced premature redemption under its Sovereign Gold Bond (SGB) 2020-21 Series-VII for investors tomorrow, on 20 April, according to a release from the central bank.
This is under government rules on the SGB scheme where “premature redemption of gold bonds may be permitted after the fifth year from the date of issue, on the date on which interest is payable”.
What is the price for premature redemption of SGB?
According to the release, the redemption price of the SGB will be based on simple average of closing price of gold of 999 purity of previous three business days from the date of redemption. The price used will be as published by the India Bullion and Jewellers Association Ltd (IBJA), it added.
“Accordingly, the redemption price for premature redemption due on 20 April, shall be ₹15,254 (Rupees fifteen thousand two hundred and fifty-four) per unit of SGB based on the simple average of closing price of gold for the three business days i.e., 17-17 April 2026,” it stated.
How much will investors gain?
Investors who opted for the gold bond stand to gain over 202% increase at ₹15,254/unit, against the issue purchase price of ₹5,051/unit.
For investors who purchased the SGBs online, there was a ₹50 discount at time of issuance, which increased their margin gain to 205%, when this is factored into the equation.
Further, the SGB also earned investors 2.5% annual interest for the holding period.
What is the usual tenure of SGBs?
Sovereign Gold Bonds issued by the banking regulator are usually payable at their date of expiration, which is eight years from issue date.
Issue date of this SGB series was on 20 October 2020, and the next due date of premature redemption of the above tranche is on 20 April 2026, the release added. This makes it eligible for premature redemption by the central bank.
What was the SGB scheme? What is its status in 2026?
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold, issued by the RBI on behalf of the Government of India. An alternative to physical gold, they give investors the benefit of capital appreciation backed by government security and without extra charges attached to traditional gold holdings.
What is status of SGB scheme in 2026?
- The scheme has been paused in effect amid concerns over high borrowing, as per a Clear Tax report.
- Those with existing SGB holdings will continue till maturity at 2.5% annual interest or early exit during premature redemption.
- Those with existing holdings can also trade SGBs on stock exchanges, it added.
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