The premature redemption price of Sovereign Gold Bonds (SGBs) was announced by the Reserve Bank of India (RBI) on Tuesday. It will be ₹4,813 per unit, which is at about 85 per cent premium from the issue price of ₹2,600 fixed in January 2016.
As per the government notification on SGB issued on January 14, 2016, by the RBI, premature redemption is likely to be permitted after the fifth year from the date of issue of such Gold Bond on the date on which interest is payable.
"The redemption price for the premature redemption falling due on February 08, 2022, shall be ₹4,813 per unit of SGB, based on the simple average of closing gold price for the week January 31- February 04, 2022," RBI mentioned in its recent press release.
The January 2016 issue was the second tranche of the government's gold bond scheme launched in November 2015. The first tranche of sovereign gold bonds was available for purchase between 5-20 November 2015.
"The redemption price of SGB is based on the simple average closing gold price of 999 purity [published by the India Bullion and Jewellers Association Ltd (IBJA)] of the week (Monday-Friday) preceding the date of redemption," stated the RBI's release on Tuesday. Therefore, the forthcoming due date of premature redemption of the above tranche shall be February 08, 2022.
SGBs are government securities denominated in grams of gold, and they are substitutes for holding physical gold. Investors have to pay the issue price in cash, and the bonds will be redeemed in money on maturity. RBI issues the bonds on behalf of the Government of India.
The subscription for the series IX tranche of the SGB scheme happened between January 10, 2022, and January 14, 2022.
SGBs aim to reduce the demand for physical gold so that a considerable part of domestic savings is directed to financial savings. The tenure of SGBs is eight years, with an exit option available from the fifth year. Resident individuals, Hindu Undivided Families (HUFs), Trusts, universities, and Charitable Institutions can purchase gold bonds.