RBI Announces Price For Early Redemption Of Sovereign Gold Bonds

The Reserve Bank of India has released the price for the premature redemptions of Sovereign Gold Bonds issued on Aug. 14, 2019. 

In a press release, the RBI said it has fixed the early redemption price of SGB 2019-20 Series III at Rs 7,000 per unit. Bond holders can prematurely redeem their SGB on Aug. 14.

The investors must redeem their bonds on the day the interest is due. The premature redemption of SGBs is permitted only five years after the issue date.

The redemption price of SGBs shall be based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd.

Accordingly, the redemption price for premature redemption in this case was calculated based on the simple average of closing gold price for the three business days, that is, Aug. 9 (Friday), Aug. 12 (Monday), and Aug. 13 (Tuesday), 2024.

Sovereign gold bonds, issued by the Reserve Bank of India, are government securities denominated in grams of gold. Investors purchase the bond with cash, and upon maturity, they can redeem it with cash.

Investing in gold bonds guarantees investors the market value of gold at maturity. The method of calculating the redemption amount ensured this. Adding to this, investors are also paid 2.5% interest annually during the tenor of the bond.

The central bank issues SGBs four times a year, or on a quarterly basis throughout the financial year.

The latest issue was the Sovereign Gold Bond 2023-2024 Series III, which was issued on Dec. 18–22, 2023. The issue price was set at Rs 6,199 per gram of gold.