Sovereign Gold Bond
You must have seen the returns given on gold. Gold is also considered a safe investment. Although there has been a lot of movement in this metal for the past few days, the confidence of those investing in it remains strong. But do you know that its bond i.e. Sovereign Gold Bond (SGB) has given more returns to investors than gold? Let us understand it in simple language.
The Reserve Bank of India (RBI) has announced the premature redemption price for the Sovereign Gold Bond SGB 2018-19 Series-VI-Issue for the February 12, 2019 tranche. According to the statement of the central bank, investors will have the option to prematurely redeem this SGB tranche from February 12, 2026. According to RBI, premature redemption of SGB series can be done on the day the interest is received, after completion of five years from the date of bond issue.
How is SGB redemption price calculated?
As per the rules, the redemption value is decided on the basis of the average closing price of gold of 999 purity issued by the India Bullion and Jewelers Association (IBJA) in the last three working days.
What is the premature redemption price?
The premature redemption price to be received on February 12, 2026, has been fixed at Rs 15,615 per unit based on the average of the closing prices of gold of the last three business days i.e. February 9, 10 and 11, 2026.
SGB interest payment
SGBs offer a fixed interest rate of 2.50% per annum on the initial investment amount. The interest amount is sent to the investor’s bank account every six months. The last interest installment is paid along with the principal amount on maturity.
What do investors have to do for redemption?
Investors holding SGB should check the redemption schedule carefully. Some important tasks are as follows-
a) Determine which tranche your bond belongs to by looking at the issue date.
b) Ensure that the premature withdrawal request is submitted before the due date.
SGB details
In SGB, one gets the benefit of both the increase in the price of gold as well as the fixed annual interest. This interest is available every six months. Investors can hold them till maturity to get long term tax-free benefits. However, some people may prefer to redeem prematurely due to financial need.
