SGB final redemption: This Sovereign Gold Bond tranche is up for final redemption today

With no new tranche announcement of Sovereign Gold Bonds (SGB) for this year, the Reserve Bank of India (RBI) has announced the final redemption of SGB 2016-17 Series II which is due today that is September 30 2024. It was issued on September 30, 2016. The tenure of the SGB is 8 years which can be prematurely redeemed after 5 years.

SGB 2016-17 Series II: What is the final redemption price

The redemption price for the final redemption due on September 30, 2024 shall be Rs 7,517 per unit of SGB based on the simple average of closing price of gold for the week September 23 – September 27, 2024.

Sovereign Gold Bond: RBI announces SGB premature redemption dates for October 2024- March 2025, check details

How is the final SGB redemption amount calculated

The redemption price of SGB shall be based on the simple average of closing price of gold of 999 purity of the week (Monday-Friday), preceding the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA).

SGB 2016-17 Series II: What was the issue price

The issue price was Rs 3,150 when it was issued on September 30, 2016. The interest on the Gold Bonds was fixed rate of interest at 2.75 per cent per annum on the amount of initial investment. However, the prevailing interest rate now is 2.50%. The interest will paid in half-yearly rests and the last interest shall be payable along with the principal on maturity.

Important FAQs to note on Sovereign Gold Bonds, as per the RBI website.

What is Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.

Are there any risks in investing in SGBs?
There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

What will I get on redemption?
On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited. Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

What are the procedures involved during redemption?
The investor will be advised one month before maturity regarding the ensuing maturity of the bond. On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.
In case there are changes in any details, such as, account number, email ids, then the investor must intimate the bank/SHCIL/PO promptly.

Can I encash the bond anytime I want? Is premature redemption allowed?

Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.