The Reserve Bank of India allows premature redemption of Sovereign Gold Bonds (SGBs) from the fifth year from the date of issue of these securities. The central bank recently announced the dates for premature redemption for SGBs issued in various tranches.
RBI has also released the calendar for SGBs due for premature redemption between October 2022 and March 2023, along with dates for submission of the request for redemption.
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The dates may change in case of unscheduled holidays. Investors are advised to take note of the period for submission of requests for redemption of SGB, in case they choose to redeem their holdings before maturity, the RBI said.
Starting in 2015, the RBI has been issuing SGBs in multiple tranches every financial year. The maturity period of these gold bonds is 8 years, but premature redemption of the bonds is permitted after five years from the date of issue of such bond, on the date on which the next interest is payable. The request for pre-mature redemption should be submitted at least 10 days before the next interest payment date.
As shown in the chart, for 2017-18 Series VII to XIV bonds investors may submit a request for redemption of units between October 20, 2022 and December 1, 2022.
How is redemption price of gold bonds calculated?
The redemption price of SGB shall be based on the simple average of closing gold price of 999 purity of previous three business days from the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for premature redemption due on October 15, 2022 shall be Rs 5069/- (Rupees Five Thousand Sixty-nine only) per unit of SGB based on the simple average of closing gold price for previous three business days, i.e., October 12 – 14, 2022.
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The redemption request is scrutinised for correctness of the particulars and may be submitted to RBI through the E-Kuber Portal at least four days before the due date of interest. On maturity and in case of premature redemption, the gold bonds will be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous week (Monday to Friday) for SGBs issued under tranche 1 to 9 and previous three working days for tranches issued thereafter at the rate published by the India Bullion and Jewellers Association Limited. The redemption proceeds shall be credited to the bank account of the customer.
