The Reserve Bank of India (RBI) announced the final redemption details of SGB 2016-17 Series II issued on September 30, 2016. The final redemption price shall be Rs 7,517 per unit of SGB. It is based on the simple average closing price of gold for the week of September 23 – September 27, 2024.
As per Sovereign Gold Bond Scheme rules the Gold Bond shall be repayable on the expiration of eight years from the date of issue of the Gold Bonds. Accordingly, the final redemption date of the above tranche shall be September 30, 2024, RBI said. On maturity, SGBs are automatically redeemed. The proceeds are credited to the bank account linked to the investor's SGB application.
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SGB
SGBs provide a fixed rate of 2.50 per cent interest paid bi-annually and finally, the redemption price for both these bonds is 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).
Returns From SGB 2016-17 Series II
The issue price for the Sovereign Gold Bond (SGB) 2016-17 Series II was Rs 3,119 per gram. This SGB has completed 8 years of tenure. The appreciated price after 8 years is Rs 7,517 per unit. In addition to this, an annual interest of 2.50 per cent was also paid every year for 8 years. So, the investment received Rs 623 in interest, in addition to capital gains worth Rs 4,398.
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So the overall ending value of the investment amounts to Rs 8,140 (redemption value plus interest amount), amounting to 160 per cent gross return. CAGR amounts to 12.74 per centExperts recommend that retail investors limit their gold investments to five to ten per cent of their portfolio while avoiding physical gold. Gold has shown high volatility over the past ten years compared to other long-term investment options.
