RBI announced premature redemption details of two Sovereign Gold Bond schemes issued in 2017 and 2019. Read on to learn more about Sovereign Gold Bonds and how to redeem them prematurely.
The Reserve Bank of India (RBI) announced premature redemption details of two Sovereign Golds, namely SGB 2017-18 Series IX and SGB 2019-20 Series I. SGB 2017-18 Series IX and SGB 2019-20 Series I were issued on December 11, 2017 and June 11, 2019, respectively.
As per Sovereign Gold Bond Scheme rules that allow premature exit once the scheme completes five years from the date of purchase, the next due date of premature redemption of the above tranches is on June 11, 2024. The maturity tenure of these bonds is 8 years and they provide a fixed rate of 2.50 per cent interest paid bi-annually.
The redemption price for both these bonds is Rs 7,195 based on the simple average of the closing gold price (999 purity) on the previous three business days from the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA).
To prematurely withdraw an SGB, one must submit a request to the RO (regional office) or depository at least 10 days before the interest payment falls due. "The request shall be scrutinized to verify the correctness of the particulars and may be submitted to RBI through the E-Kuber Portal at least four days before the due date of interest,” RBI release said.
For investments done outside of a demat account, premature exit can be processed through the bank, SHCIL, post office or agent if investors apply a maximum of 30 days and a minimum of one day before the scheduled premature redemption date.
Historical data shows RBI typically releasing four tranches of SGBs in a fiscal year with June typically being the month for first issuance. In the financial year 2023–24, also the first series came in the third week of June. In FY 2022-23, the government released two tranches in June and August, followed by two more in December and March 2023. The number of issuances has reduced compared to erstwhile days when RBI made around 10 issuances a year.
Experts suggest retail investors only invest up to five to 10 per cent of their portfolio in gold, but avoid physical gold. Gold has exhibited high volatility and poor returns in ten years compared to other long-term investment avenues.
In the financial year 2023–24 investors bought Rs 27,031 crore (44.34 tonnes) worth of bonds, four times compared to FY 2022-23, as per the annual report of the Reserve Bank.