The Reserve Bank of India (RBI) has announced the redemption price for sovereign gold bond (SGB) Series VI of 2018-19 due on February 12, 2024. The premature redemption rate for the same is ₹6,263 per unit, which is a profit of ₹2,937 per unit and nearly 88% above the issue price. The issue price for the same was ₹3,326 per unit.
Redemption price calculation
The redemption price of SGB is based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption as published by the India Bullion and Jewellers Association (IBJA).
Accordingly, the redemption price for premature redemption of SGB Series VI of 2018-19 is based on the simple average of closing gold price for February 7, 2024, February 8, 2024 and February 9, 2024.
SGB and its early encashment
Sovereign gold bonds or SGBs are issued by the government, for which investors get a holding certificate. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash.
Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after the fifth year from the date of issue on coupon payment dates.
Ways to prematurely withdraw SGBs
In case of premature redemption, investors can approach the concerned bank/SHCIL offices/post office/agent thirty days before the coupon payment date.
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, according to the Reserve Bank of India (RBI).
The proceeds are credited to the customer’s bank account provided at the time of applying for the bond.
Maturity
On maturity, these bonds are redeemed in rupees and the redemption price is based on the simple average of the closing
price of gold of 999 purity of the previous three business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.
The investors are advised one month before maturity regarding the ensuing maturity of the bond.
On the date of maturity, the maturity proceeds are credited to the bank account as per the details on record. In case there are changes in any details, such as account numbers, or email IDs, then the investor must inform the bank/SHCIL/PO promptly.
