The Reserve Bank of India (RBI) recently issued a notification regarding premature redemption under the Sovereign Gold Bond (SGB) Scheme. Specifically, the redemption price for premature redemption due on May 17, 2024 (Series III of SGB 2016-17) was detailed in the announcement. Investors will be interested to note that according to the Government of India notification in October 2017 and 2018, it is possible to cash in Sovereign Gold Bonds early after the fifth year, aligning with the bond’s interest payout date. As a result, the next due date for premature redemption of the aforementioned tranche is set for May 17, 2024.
When redeeming SGB, the price will be determined based on the average gold price of 999 purity over the previous three business days just before the redemption date, as recorded by the India Bullion and Jewellers Association Ltd (IBJA). Consequently, the redemption price for premature redemption due on May 17, 2024 is established at Rs 7193 per unit of SGB, calculated using the simple average of the closing gold price for the week spanning May 06 – May 10, 2024.
This process provides investors with a transparent and fair method for premature redemption, ensuring that the redemption price is reflective of the prevailing market conditions. Investors considering premature redemption under the Sovereign Gold Bond Scheme should take note of these details and plan accordingly based on their individual investment strategies and objectives.
