The Reserve Bank of India (RBI) has set the premature redemption price for Sovereign Gold Bonds (SGBs) due on April 23, 2024. This announcement is significant for those holding SGBs, as it provides clarity on the redemption value and aligns with the bond’s conditions.
Let us see what is the latest sovereign gold bond redemption price and its calculation!
Latest RBI Update on Sovereign Gold Bonds (SGBs)
- Government of India Notifications allow premature redemption of Sovereign Gold Bonds (SGB) after the fifth year from the issuance date. This helps in aligning with the interest payment date.
- The next eligible premature redemption date for SGB tranches from 2017-18 Series IV and 2018-19 Series II is April 23, 2024.
- The redemption price for the sovereign gold bond scheme is calculated based on the simple average of closing gold prices of 999 purity over the preceding three business days before the redemption date.
- India Bullion and Jewellers Association Ltd (IBJA) reports this closing gold price for sovereign gold bonds.
- For the premature redemption scheduled on April 23, 2024, the redemption price is ₹7,325 per unit of SGB.
- The average closing gold price of April 18, 19, and 22, 2024, are prominent for it.
- RBI has also facilitated early redemption of SGB 2017-18 Series III at ₹7,260 per unit based on similar gold price averaging.
What is the Premature Redemption Price?
The premature redemption price is the amount paid to the holder of an investment instrument when they redeem the bond before its maturity date. This price is typically determined based on specific conditions set at issuance.
In essence, it’s the price that investors receive if they decide to exit their investment in the bonds earlier than the original term agreed upon at purchase.
The latest RBI update declares the sovereign gold bonds’ redemption price.
Understanding the Calculation Method for Sovereign Gold Bond Redemption Price
The calculation of the redemption price is simple. It involves taking the average of the closing prices of 999 purity gold over the last three business days. For the upcoming April 23 redemption, the price has been set at ₹7,325 per gram of gold.
This gold bond redemption price involves using the average gold prices recorded on April 18, 19, and 22.
Additional Redemption Announcement
In a related development, the RBI has facilitated the early redemption of the SGB 2017-18, Series III on April 16.
The redemption price for this series has been determined at ₹7,260 per unit, following the same averaging method of gold prices before the redemption.
About the Sovereign Gold Bond Scheme
Launched under the Government Securities Act of 2006, the Sovereign Gold Bond Scheme offers investors a systematic way to invest in gold. It caters to various types of investors, including individuals, trusts, charitable institutions, and universities.
The bonds allow investments starting from one gram of gold. It permits individuals to have a maximum of 4 kg per fiscal year, and trusts and similar entities are allowed up to 20 kg.
Conclusion
The RBI’s announcement of the premature redemption price for Sovereign Gold Bonds highlights the flexibility and market-oriented nature of this investment scheme. Investors should consider this development and explore further details on the Sovereign Gold Bond Scheme for potential investment opportunities.
Source– https://rbi.org.in/
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.