380% gold returns as SGB 2017-18 Series XIII matures at Rs 13,563

Bought at Rs 2,816 in 2017, the gold bond pays out Rs 13,563 at maturity

The Sovereign Gold Bond (SGB) 2017-18 Series XIII has delivered an absolute return of nearly 382 per cent for investors who bought the bond at the online issue price and held it till maturity, according to the final redemption price announced by the Reserve Bank of India.

 

The tranche matured on December 26, 2025, with the RBI fixing the redemption value at Rs 13,563 per unit, reflecting the sharp rise in domestic gold prices over the past eight years.

 

Final redemption price explained

 

For SGB 2017-18 Series XIII, the RBI has fixed the final redemption price at Rs 13,563 per unit. This price is calculated based on the simple average of the closing price of gold of 999 purity for the three business days preceding maturity- December 22, 23 and 24. The price data is published by the India Bullion and Jewellers Association Ltd, according to the rules governing the scheme.

 

 

The bonds were originally issued in December 2017 at Rs 2,866 per gram, with a discounted issue price of Rs 2,816 per gram for investors who applied online. At maturity, this translates into a sharp jump in value purely on account of gold price appreciation.  ALSO READ | 293% gains for Sovereign Gold Bond 2018-19 Series-I, RBI sets exit price

How much return did investors make?

 

Investors who purchased the bond online at Rs 2,816 per unit and held it till maturity have earned an absolute price gain of Rs 10,747 per unit, excluding interest income. In percentage terms, this works out to an absolute return of nearly 382 per cent over eight years.

 

In addition to this capital appreciation, SGB holders also received 2.5 per cent annual interest, paid semi-annually, on the initial investment amount. This interest component further improves the overall return from the bond.

Key features of the SGB scheme

 

The Sovereign Gold Bond scheme is managed by the RBI on behalf of the Government of India and is designed as an alternative to physical gold. Some of its core features include:

 

·  No storage or purity risks, unlike physical gold

 

·  Fixed annual interest of 2.5 per cent

 

·  Bonds can be held in paper or demat form

 

·  Tradable on exchanges and transferable

 

·  Accepted as collateral for loans

 

While the tenure is eight years, investors are allowed to opt for premature redemption after the fifth year, but only on interest payment dates.

What investors should know about redemption?

 

For bonds held till maturity, the RBI credits the redemption proceeds directly to the investor’s registered bank account. Investors are typically informed about the impending maturity around one month in advance.

 

Those who have changed bank account details, email IDs or other particulars are required to update the information with their bank, post office or authorised receiving office to avoid delays.

Risks to keep in mind

 

The primary risk with SGBs is linked to fluctuations in gold prices. If gold prices fall at the time of exit, returns may be lower. However, investors do not lose the underlying quantity of gold they invested in, accroding to RBI disclosures.