The Reserve Bank of India (RBI) on August 30, 2023 released the calendar for premature redemption of sovereign gold bonds (SGBs) in the next seven months. The SGB scheme allows investors to redeem their bonds after five years from the date of issue, coinciding with the coupon payment date.
Keeping in line with this, RBI has now unveiled the schedule for the tranches of SGBs that will become eligible for premature redemption from October1, 2023 to March 31, 2024. This step provides investors with a clear understanding of when they can opt for early redemption.
The calendar shows the specific window within which investors can submit their requests for premature redemption. The calendar shows the redemption window falling approximately 10-15 days prior to the coupon payment date.
The following SGB series have the most recent ‘dates for submitting the request for premature redemption by investors’ within the next two months:
2017-18 Series III issued on October 16, 2017 – Submission dates: September 16, 2023, to October 6, 2023.
2017-18 Series IV issued on October 23, 2017 – Submission dates: September 23, 2023, to October 13, 2023.
2018-19 Series II issued on October 23, 2018 – Submission dates: September 23, 2023, to October 13, 2023.
2017-18 Series V issued on October 30, 2017 – Submission dates: September 30, 2023, to October 20, 2023.
A total of 24 series are scheduled for premature redemption till March 2024, and shown in the calendar. The list includes six SGBs with coupon payment dates set for the 2024.
“It may, however, be noted that the above-mentioned dates may undergo a change in case of unscheduled holidays,” RBI further said.
SGBs offer several advantages over physical gold in matters of investments. These bonds are not subject to making and storage costs, as well as purity concerns associated with physical gold. Further, they offer tax exemptions upon redemption post maturity. However, selling the bonds before 36 months might attract Short-Term Capital Gains (STCG) tax based on the investor’s income tax bracket.
With a minimum investment of just one gram and a maximum subscription limit of 4 kg for individuals, SGBs present a flexible investment avenue. Although they have lower liquidity compared to physical gold, these bonds can be traded on the stock exchange within two weeks of issue, according to the RBI’s guidelines.
Investing in SGBs can provide a relatively secure option, especially during periods of inflation or economic uncertainty.
