The Reserve Bank Of India (RBI) has declared the fixed rate for the premature redemption of the Sovereign Gold Bonds (SGB) from the 2017-18 Series IV and 2018-19 Series II tranches on April 23. The investors of this series can withdraw money before maturity after five years of the issue date, along with the interest payment dates on these bonds. It has set the premature price at Rs 7,325 per unit. The conditions mentioned in the announcement are as per the Government of India notifications, dated October 6, 2017 and October 8, 2018. The redemption price of SGB is based on the average closing price of gold of 999 purity published by India Bullion and Jewelers Association Limited (IBJA) of 3 business days, preceding the date of redemption. The redemption price for premature redemption payable on April 23, 2024, will be Rs 7,325 per SGB unit. It is based on the average closing price of gold on April 18, 19 and 22.
Sovereign Gold Bonds are government securities and are an alternative to physical gold. Investors have to pay the issue price in cash and the bond will be redeemed in cash on maturity. These bonds are issued by RBI on behalf of the Government of India.
The Government started the SGB Scheme in November 2015. Investment in Sovereign Gold Bonds gives 2.5 percent interest annually. The last interest payment is made on maturity along with the principal. In the Sovereign Gold Bond Scheme, a person can buy bonds worth a maximum of 4 kg in a financial year. The minimum investment required is one gram.
The maturity period of a Sovereign Gold Bond is 8 years. Investors are allowed to withdraw their money before maturity. It is only applicable after five years. Investors have to maintain their investment in these bonds for at least five years before premature redemption. These bonds can be bought through all banks, Stock Holding Corporation of India Limited (SHCIL), post offices and recognised stock exchanges, NSE and BSE. Please note that these are not sold in small finance banks and payment banks.
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