Sovereign Gold Bond
There is great news this Diwali for those investing in Sovereign Gold Bond (SGB). The Reserve Bank of India (RBI) has announced the date and price of premature redemption for investors of SGB 2020-21 Series-VII. This bond was issued on 20 October 2020 and now investors will be able to redeem it prematurely on 20 October 2025 i.e. on completion of five years.
Sovereign gold bonds are for 8 years
Usually the total tenure of SGB is 8 years, but RBI gives investors the option of premature withdrawal after completion of 5 years. This option is available only when the interest payment date coincides with the date. According to RBI, the redemption price of this series has been fixed at ₹ 12,792 per unit, which is based on the average closing price of gold of 999 purity issued by the India Bullion and Jewelers Association (IBJA) on October 15, 16 and 17, 2025.
153% return on sovereign gold bond
This SGB was open for subscription between 12 to 16 October 2020 and was issued to investors on 20 October 2020. At that time its issue price was kept at ₹ 5,051 per gram. Now that its redemption price has been fixed at ₹ 12,792 per unit, investors will make a profit of approximately ₹ 7,741 per unit. That means a return of about 153% on investment and that too without any risk or hassle of storing gold.
Sovereign Gold Bonds provide double benefits to investors, one is the benefit of rising gold price, and second is the fixed annual interest which is paid every six months. If investors wish, they can hold it for full 8 years and get tax-free returns, or can redeem it after 5 years on the date fixed by RBI.
There are many benefits of investing in SGB
According to RBI, SGB is a better option than buying physical gold. There are no problems like storage, theft or purity in this. Also, there are no additional expenses like making charges or premium. SGB is kept in the records of RBI or in demat form, due to which there is no fear of its being lost or counterfeit.
If an investor wants to redeem it prematurely, he will have to apply as per the redemption schedule decided by RBI. For this, it is important for the investor to know the issue date and series number of his bond and submit the request before the due date.
Overall, those who invested in SGB Series-VII in 2020 are now going to get excellent returns. The price increase from ₹ 5,051 to ₹ 12,792 proves that gold bonds are proving to be a very safe and profitable investment for the long term.