Investors in the Sovereign Gold Bond (SGB) 2016-17 Series IV and 2019-20 Series IV are set for significant returns, with the Reserve Bank of India (RBI) announcing the final redemption price. The investors’ wealth could swell nearly 3 times on redemption due to skyrocketing gold prices.
The 2016-17 Series IV bonds, issued in February 2017 at Rs 2,943 per gram, will now be redeemed at Rs 8,624 per gram, offering a 193 per cent return. Similarly, investors in the 2019-20 Series IV, issued in September 2019 at the same price, can prematurely redeem the bonds at Rs 8,634 per gram.
The redemption for both series is scheduled for March 17 based on the average closing price of 999 purity gold between March 10 and March 13, this year, as published by the India Bullion and Jewellers Association (IBJA).
How The Redemption Price Is Calculated
The redemption price for early exit is based on the average gold price (999 purity) for the three business days before the redemption date.
For this bond series, IBJA has calculated the price using gold rates from March 11, 12, and 13, 2025. Sovereign Gold Bonds (SGBs) have an eight-year maturity, but investors can exit after five years, only on interest payment dates.
For SGB Series IV 2019-20, the earliest redemption date is March 17, 2025.
Redemption Process
To redeem the bonds prematurely, investors must submit a request 30 days before the interest payment date at their designated bank, SHCIL office, post office, or agent. The request must be made at least one day before March 17, to be processed successfully. Once approved, the proceeds will be credited directly to the investor’s bank account linked to the SGB application.
Benefits Of Premature Redemption
Premature redemption gives investors early access to their money instead of waiting for the full maturity period. It also allows them to take advantage of higher gold prices while keeping their investment safe. Since gold prices have risen significantly, exiting now could be a smart choice.
Benefits Of Holding SGBs Until Maturity
Experts highlight the advantages of holding SGBs for the full tenure:
- Tax-Free Gains: No capital gains tax if held till maturity.
- Guaranteed Interest: 2.5 per cent annual interest ensures a steady income.
- Market-Linked Returns: Value tied to prevailing gold prices.
- Safety: Backed by the Government of India.
- No Storage Costs: Eliminates concerns related to physical gold.
Gold prices continue to soar globally, crossing $3,000 per troy ounce. In India, prices have reached an all-time high of Rs 88,310 per 10 grams. On the MCX, gold has surged by 14 per cent this year, adding approximately Rs 11,000 to its value.
