The last day to request for premature redemption or withdrawal of Sovereign Gold Bond Scheme (SGB) 2016-17 Series IV tranche is Friday, September 16. This is because the second due date for the redemption has been fixed for September 17, 2022.
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According to the Reserve Bank of India (RBI), the request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. Hence, the last day to request the same is today.
The price for premature withdrawal of the said tranche has been fixed at Rs 5,077 per unit, according to the Reserve Bank of India's (RBI's) notification.
How is the redemption price decided?
The redemption price of SGB is based on the simple average of closing gold price of 999 purity of the week (Monday-Friday) preceding the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA).
How much will investors earn on this redemption?
SGB 2016-17, Series IV was Rs 2,893 per gram of gold. So, if the investors opt for premature withdrawal, then the absolute return will be 75.49 percent (Redemption price of Rs 5,077 — issue of Rs 2,893)/100).
This will be in addition to the half-yearly interest payment of 2.5 percent on the scheme.
When is premature redemption allowed?
Though the bond's tenure is eight years, early encashment/redemption of the bond is allowed after the fifth year from the date of issue on coupon payment dates.
Accordingly, the second due date of premature redemption of the Sovereign Gold Bond Scheme (SGB) 2016-17 Series IV tranche is September 17, 2022, i.e. tomorrow.
How can investors proceed with premature redemption?
In case of premature redemption, investors can approach the concerned bank/SHCIL offices/post office/agent before the coupon payment date.
The proceeds will be credited to the customer’s bank account provided when applying for the bond.
In case there are changes in any details, such as account number, or email ids, then the investor must inform the bank/SHCIL/PO promptly.
First Published: Sept 16, 2022 1:46 PM IST
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