India sets sovereign gold bond redemption rate at ₹6076 per unit

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India sets sovereign gold bond redemption rate at ₹6076 per unit

NEW DELHI - The Reserve Bank of India (RBI) has announced the premature redemption rate for the Sovereign Gold Bonds (SGBs) issued in November 2017. Investors who hold Series VIII bonds, which are set to mature on Monday, will be able to redeem their investments at ₹6076 per unit. This rate has been determined based on the average gold prices provided by the Indian Bullion and Jewellers Association (IBJA) from November 15 to November 17.

Sovereign Gold Bonds are government securities denominated in grams of gold, offering a cash-based alternative to owning physical gold. Investors receive the ongoing market price at maturity, which is calculated from a simple average of the closing gold prices on specified dates. The RBI, which issues these bonds on behalf of the Government of India (GOI), has stipulated that premature redemptions can be made after five years from issuance on interest payment dates, as per the policy dated January 14, 2016.

The current redemption price reflects the performance of gold over the period since issuance. Deputy General Manager Shweta Sharma communicated this information in Press Release: 2023-2024/1315. The SGB scheme allows investors to benefit from appreciation in gold prices while also providing an annual interest on their investment.

Investors looking forward to redeeming their SGBs will be doing so under the guidelines set by GOI's F.No.4(25) – W&M/2017 from October 2017, which specifically permits such transactions post five years of holding the bonds. This upcoming redemption opportunity demonstrates the RBI's commitment to providing investors with a secure and formal avenue for investing in gold, which traditionally holds a key place in India's investment landscape.

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