RBI allows SGB redemption for 2017, 2018 series as gold tops Rs 1 lakh

The series have completed the mandatory five-year lock-in period and investors are allowed early exit

The Reserve Bank of India (RBI) has said investors holding Sovereign Gold Bonds (SGBs), Series IV of 2017-18 and Series II of 2018-19, are eligible for premature redemption  from April 23. The two series, both issued on October 23 of their respective years, have completed the mandatory five-year lock-in period, allowing early exit on the designated interest payment date.

 

“Premature redemption of Gold Bond may be permitted after the fifth year from the date of issue… on the date on which interest is payable,” the RBI said in the statement issued on April 22.

 

What are SGBs?

 

The scheme allows individuals to invest in gold without holding the physical asset, offering annual interest of 2.5 per cent and capital appreciation linked to gold prices. SGBs have an eight-year tenure, but investors can choose to redeem them prematurely after the fifth year. This early redemption is only allowed on specific interest payout dates, which are semi-annual. The capital gains from redemption are tax-free if held till maturity.

 

 

Backed by the Government of India, SGBs are seen as a secure and efficient investment.  ALSO READ: Indian Rupee ends weaker at 85.42/$ as dollar index stages recovery

 

Redemption Price for Series IV of 2017-18 and Series II of 2018-19:

 

According to RBI, investors redeeming their bonds will receive Rs 9,669 per gram. This figure is calculated using the simple average of closing prices of 999 purity gold over the last three working days, April 17, 21, and 22, based on data from the India Bullion and Jewellers Association Ltd. (IBJA).

 

According to IBJA’s records, gold’s opening and closing prices for the days are listed below:

 

April 17: Rs 95,207 (opening price) and Rs 94,910 (closing price)

 

April 21: Rs 96,587 (opening price) and Rs 96,670 (closing price)

 

April 22: Rs 99,100 (opening price) and Rs 98,484 (closing price)

 

These rates were averaged to arrive at the final redemption price.

 

Attractive Exit Amid Rising Gold Prices

 

This redemption comes when gold prices have been trending upwards, driven by global economic uncertainties and inflation. According to IBJA, gold’s closing price on April 23 was Rs 96,085 per gram.

 

For investors who entered the scheme in 2017 or 2018, when gold prices were around Rs 29,000 - Rs 31,000 per 10 grams, this offers a significant capital gain.

 

How to redeem

 

Eligible bondholders can approach their respective banks or issuing agents to complete the redemption formalities.