RBI announces premature redemption price for Sovereign Gold Bonds. Here is how it is calculated
The Reserve Bank of India (RBI) has declared the early redemption price for Sovereign Gold Bonds (SGBs) from the 2017-18 Series IV and 2018-19 Series II tranches, due on April 23. The announcement aligns with the terms stated in the Government of India notifications on October 6, 2017, and October 8, 2018. These terms allow holders the option for early redemption after five years from the issue date, coinciding with the interest payment dates on these bonds.
The calculation of the redemption price is based on the average of the closing prices of 999 purity gold, as reported by the India Bullion and Jewellers Association. The dates considered for the calculation were the preceding three business days before the redemption date. Consequently, the price for the upcoming April 23 redemption is ₹7,325 per gram of gold. This price reflects the average gold prices recorded on April 18, 19, and 22.
In a related development, the RBI has also facilitated the early redemption of the SGB 2017-18, Series III on April 16. The redemption price for this series has been determined at ₹7,260 per unit, based on similar averaging of the gold prices over the relevant days before the redemption.
Launched under the Government Securities Act of 2006, the Sovereign Gold Bond Scheme is aimed at offering investors a systematic option to invest in gold. It catered to investors, including individuals, trusts, charitable institutions, and universities. The bonds allowed investments starting from one gram of gold, with individuals allowed a maximum of 4 kg per fiscal year, and trusts and similar entities up to 20 kg.
(With inputs from ANI)
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