SGB premature redemption today; Rs 1 lakh turns Rs 3.05 lakh; check RBI detail
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SGB premature redemption date today
The Reserve Bank of India (RBI) has announced the premature redemption price for the Sovereign Gold Bond SGB 2020-21 Series-VII, issued on October 20, 2020. According to a Central Bank statement, investors will be able to redeem this SGB tranche prematurely beginning April 20, 2026.
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How will the SGB redemption price for premature redemption be calculated?
The premature redemption price due on April 20, 2026, has been fixed at Rs 15,254 per unit of SGB, based on the simple average of the closing price of gold for the last three business days, i.e April 15, April 16, and April 17, 2026.
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What is the premature redemption price for SGB 2020-21 Series-VII?
The SGB 2020-21 Series-VII was issued at Rs 5,001 per gram for online bonds. It will yield an absolute simple return of nearly 205% on the date of premature redemption.
For investors who bought SGBs of the same series offline, the issue price was Rs 5,051 per gram of gold. A Rs 50 discount was available on the online purchase of the SGB.
The absolute return comes to Rs 15,254 -5,001 = Rs 10,253 (without factoring in the interest of 2.5%). In percentage terms, it is 10,253 ÷ 5,001 ×100 = 205.02%.
For investors who bought SGBs of the same series offline, the issue price was Rs 5,051 per gram of gold. A Rs 50 discount was available on the online purchase of the SGB.
The absolute return comes to Rs 15,254 -5,001 = Rs 10,253 (without factoring in the interest of 2.5%). In percentage terms, it is 10,253 ÷ 5,001 ×100 = 205.02%.
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How Rs 1 lakh grew to about Rs 3.05 lakh
A 205% return means that if a person invested Rs 1 lakh in this SGB series when it was issued in 2020, the value of that investment would be about Rs 3.05 lakh, according to the current redemption price. This amount doesn’t include a 2.5% annual interest gold bond holders get on the principal investment amount.
How this works
Investment: Rs 1,00,000
Return: 205%
Gain: Rs 2,05,000
Total value = Rs 3,05,000 (approx.)
How this works
Investment: Rs 1,00,000
Return: 205%
Gain: Rs 2,05,000
Total value = Rs 3,05,000 (approx.)
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What is a Sovereign Gold Bond (SGB)? Which agency issues it?
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 are redeemed in cash on maturity. The gold bond is issued by the RBI on behalf of the Government of India.
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What is the rate of interest of SGB and how is the interest paid?
The bonds offer interest at the rate of 2.50% (fixed rate) per annum on the amount of the initial investment. Interest is credited semi-annually to the bank account of the investor and the last interest is payable on the maturity of the bond along with the principal.