SGB holders to earn 122% income from August 2016 issue as RBI sets redemption price at Rs 6,938/gram
Reserve Bank of India (RBI) has announced a final redemption price for the first tranche of the sovereign gold bond (SGB) scheme at Rs 6,938 per gram and fixed the redemption date as August 5, Monday. Those who invested in the scheme have made an income of a whopping 122% (Rs 3,819) over the issue price of Rs 3,119 per gram. This does not include an interest income of 2.5% given by the government.
The 2016-17 SGB Series I was issued on August 5, 2016. The SGBs are repayable on the expiration of eight years from the date of the issue of the gold bonds.
The redemption price of SGB is based on the simple average of closing price of gold of 999 purity of the week (Monday, July 29-Friday, August 2), preceding the date of redemption, as published by the India Bullion and Jewellers Association Ltd. (IBJA).
Meanwhile, the issue price of SGBs is based on the simple average of closing price for gold of 999 purity of the last three working days of the week preceding the subscription period. The RBI decides the price based on the price published by IBJA.
The SGBs are restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions. They are denominated in multiples of gram(s) of gold with a basic unit of one gram. While the tenor of the SGB is 8 years, investors have an option of premature redemption after the 5th year.
Minimum permissible investment will be one gram of gold while the maximum limit of subscription is 4 kg for individuals, 4 kg for HUF and 20 kg for trusts and similar
