Sovereign Bold Bond (SGB) redemption: Bought sovereign gold bonds in 2017 or 2018? You are in for good news as the RBI announced the redemption prices for the SGBs, offering a return of over 200%.The Reserve Bank of India (RBI) announced the redemption price for two sovereign gold bond tranches due for premature redemption on July 1. Investors holding the SGB 2017-18 Series-XIV and SGB 2018-19 Series-IV will be getting Rs 9,628 per unit of SGB.Even though the tenure for these gold bonds is 8 years, they allow for premature redemption after the fifth year from the date of issue.Calculating the SGB redemptionAccording to the RBI press release issued on June 30, the redemption price is calculated as the simple average of closing gold price of 999 purity for the previous three business days from the redemption date, as published by the India Bullion and Jewellers Association Ltd (IBJA).For this cycle, the relevant dates were June 26, 27 and 30, ET reported.SGB 2017-18 Series-XIVThose who invested in the SGB 2017-18 Series XIV in January 2018 at Rs 2,831 per gram are getting almost 240% return.SGB 2018-19 Series-IVThe SGB 2018-19 Series IV, issued a year later in January 2019 at Rs 3,119 per gram, has yielded an increase of over 208%. This implies that investors would be getting Rs 6,509, in case they chose to opt to withdraw prematurely.This rate does not account for the fixed 2.5% interest offered annually.Interest offeredThe bonds carry an interest rate of 2.5% per annum, paid semi-annually. This is credited directly to the investor’s bank account and is in addition to the capital appreciation. The final interest payout is made along with the principal on maturity or redemption.How to redeem SGBAs prematurelyIdentifying the bond tranche by checking the issue date to determine when they become eligible for premature redemption. They should then submit the redemption request before the deadline specified in the schedule to ensure timely processing. Investors will be notified one month in advance about the upcoming maturity of their SGBs. On the maturity date, the proceeds will be directly credited to the bank account registered with the issuing authority. In case there are any changes in personal details such as bank account number or email ID, it is important to promptly update this information with the bank, SHCIL, or post office to avoid any details.
