According to the Government of India notification dated October 06, 2017, and October 08, 2018, premature redemption of SGB may be permitted after the fifth year from the date of issue, aligning with the date on which interest is payable on the bond.The redemption price for SGB shall be based on the simple average of the closing gold price of 999 purity over the previous three business days from the redemption date, as published by the India Bullion and Jewellers Association Ltd (IBJA).Accordingly, the redemption price for premature redemption due on April 23, has been fixed at Rs 7325 per unit of SGB based on the simple average of closing gold prices for April 18, 19, and 22.
Investors in the Sovereign Gold Bond Scheme of 2017-18, Series III, have been allowed early redemption by the RBI.
The next redemption date is set for April 16, for the SGB 2017-18 Series III. The press statement of the RBI states that the early redemption price has been fixed at Rs 7260 per unit of SGB, based on the average closing gold price over the previous three business days.
The Sovereign Gold Bond Scheme was launched under the Government Securities Act, 2006, to provide investors with a structured avenue to invest in gold.
Various entities, including individuals, trusts, charitable institutions, and universities, were allowed to invest in the scheme.
The bonds were denominated in units of one gram of gold or multiples thereof, with a minimum subscription limit of one gram. Individuals could opt for up to 4 kg per fiscal year, while trusts and similar entities had a higher ceiling of 20 kg.
The premature redemption option offers investors flexibility to liquidate their investments ahead of the maturity date if needed.
Along with other benefits like interest payments and tax advantages, the premature encashment option has made the Sovereign Gold Bond Scheme an attractive investment avenue for individuals and entities looking to diversify their portfolios with gold-backed securities.
The announcement of the redemption price for SGB 2017-18 Series IV and SGB 2018-19 Series II further strengthens the bond between investors and the scheme, providing transparency and clarity in the redemption process.