Premature redemption of sovereign gold bonds: How much you will get for Series I of SGB 2016-17
RBI has set up a price for early redemption of Series I of SGB 2016-17. This series opened for subscription from July 18 to 22 in 2016. The issue price of the Sovereign Gold Bond was fixed at ₹3119 per gram of gold.
According to an RBI notification dated July 28, 2023, the redemption price for premature redemption was fixed at ₹5950. “Accordingly, the next due date of premature redemption of the above tranche shall be August 05, 2023," RBI said. “Further, the redemption price of SGB shall be 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).
Accordingly, the redemption price for the premature redemption due on August 05, 2023, shall be ₹5950/- (Rupees Five thousand nine hundred fifty only) per unit of SGB based on the simple average of closing gold price for the week of July 24-28, 2023," said RBI in a statement. Series I of SGB 2016-17 has given the investors absolute returns of about 91% in 6.5 years and a Compound annual growth rate (CAGR) of approximately 9.7%. Plus not to forget 2.5% interest on a half-yearly basis.
The interest on Sovereign Gold Bonds is paid @ 2.50% on the issue price and is credited to your bank account on a half-yearly basis. Mumbai-based tax and investment expert Balwant Jain said that an investor should have at least 10% of their portfolio in gold, and what better to park your money in SGB? Talking about the Series I of SGB 2016-17, Jain said that aCAGR of 12% is almost at par with the returns from the equities. Sovereign gold bonds are issued by RBI on behalf of the government.
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