Investors holding the Sovereign Gold Bond (SGB) 2017-18 Series VI, issued on November 6, 2017, will be eligible for premature redemption on May 6, 2025, at a price of Rs 9,453 per gram, as notified by the Reserve Bank of India.
This marks a gain of around 221% on the original issue price of Rs 2,945 per gram (or Rs 2,895 for investors), over a holding period of seven and a half years.
In an official statement on Monday, the RBI said, “The redemption price for premature redemption due on May 06, 2025 shall be Rs 9,453/- (Rupees Nine Thousand Four Hundred and Fifty-Three only) per unit of SGB based on the simple average of closing gold price for the three business days i.e., April 30, May 02 and May 05, 2025.”
Earlier, according to the RBI the Sovereign Gold Bond 2017-18 Series VI was priced at Rs 2,945 per gram, based on the average closing price of gold of 999 purity from October 25 to 27, 2017. Investors who applied online and paid digitally had received a Rs 50 discount, bringing the effective issue price to Rs 2,895 per gram.
The Sovereign Gold Bond Scheme was launched in 2015 by the Government of India, in consultation with the RBI, as a financial alternative to physical gold investment. Bonds are issued in denominations of one gram of gold or multiples thereof, and are tradable and eligible for conversion to dematerialised form. Each tranche is open for limited subscription windows and comes with a fixed interest rate of 2.50% per annum, paid semi-annually. Capital gains on redemption are tax-free for individual investors, and the bonds can also be used as collateral for loans.
Redemption of SGBs is allowed after the fifth year from the date of issue, but only on the next interest payment date. The final maturity is after eight years. The redemption price is linked to the market value of gold and is based on the simple average of closing prices of gold of 999 purity, according to the RBI.