Source: The Economic Times
New Delhi (The Hindu) The Reserve Bank of India (RBI) has published the premature redemption price for Sovereign Gold Bond (SGB) 2020–21 Series-IV. If an investor honors the early redemption of the bond on July 14, 2025, and wants to redeem it on the day of early redemption, the premature redemption price per gram will be ₹9,688 per gram.
This is quite a good return on the investment. The bond was issued in July 2020 at a price of ₹4,852 per gram. Thus, an investor profits of ₹4,836, which returns 99.67% without interest income.
What Are Sovereign Gold Bonds?
Sovereign Gold Bonds allow you to invest in gold without physically buying gold. The Reserve Bank of India issues bonds on behalf of the Government of India while the price of bonds is linked to the price of gold.
The bonds have a term of 8 years but an investor may redeem them after 5 years only on the interest (coupon) payment dates.
How Is the Redemption Price Determined?
The RBI has stated that “The redemption price of SGB 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 (IBJA).”
For this specific bond, the prices for July 9, 10, and 11, 2025 were used, which culminated in a final redemption price of ₹9,688 per gram.
What about interest income?
Along with the price increase, the bond will also pay investors a fixed interest amount of 2.50% per year based on the original purchase amount. The bond pays interest every six months and the amount is directly credited to the bank account of the investor.
The last interest will be paid along with the principal at the time they redeem the bonding or at maturity.
Steps To Early Redemption of the Bond?
It’s possible for an investor to redeem the bond early. Early redemption is permitted after five years from the actual date of issue of the original bond if an investor wants to redeem before eight years. The investor will be informed one month before the bond becomes eligible to be redeemed.
To redeem the bond:
Submit a request to the bank, post office, SHCIL office or agent, depending where the bond was originally purchased.
The redemption amount on the bond will be credited to the investor’s registered bank account.
Should any changes arise in relation to important details like email ID or bank account number, the investor should inform the bank or agent.
Can These Bonds Be Sold or Gifted?
Yes, bonds can be traded on stock exchanges if they are in demat form, as well as gifted, or otherwise transferred to any person, for example, a friend or family member, who is entitled to hold the bonds.
There will be a formal transfer form to sign, which will be obtained through the issuing bank or agent.
Can These Bonds Be Traded or Given As A Gift?
Yes, if the bonds are in demat form, they may be traded on the stock exchanges. They may also be given as a gift, or transferred to someone else, such as a friend or family member, as long as that person is eligible to hold the bond.
A formal transfer form needs to be completed, which can be obtained from the issuing bank or agent.
What is a Certificate of Holding?
Investors will receive a Certificate of Holding after they purchase the bond. The certificate can be obtained from the bank, post office, SHCIL office, or a stock exchange, and it can also be received via email if email was provided in the application form.
