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Premature Redemption of Sovereign Gold Bonds Issued In 2017 Begins


Sovereign gold bonds are issued by the Reserve Bank of India on behalf of the Indian government. They have a lock-in period of eight years, but can be redeemed after the fifth year.


The premature redemption of the Sovereign Gold Bond (SGB) Scheme 2017-18 Series VIII (Issue date November 20, 2017), falls on November 19, 2022, fifth year from the date of their issue.


Technically, it should fall on November 20, 2022, but that being a Sunday, the first due date of premature redemption of the above tranche fell on November 19, 2022.


Sovereign Gold Bonds are issued with an eight-year fixed tenure, although the Reserve Bank of India (RBI) allows for early redemption after five years from the date of issue. The redemption is permitted on the payment dates of the coupons.

Also, to be noted, the redemption price of the SGB shall be based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA).


Accordingly, the redemption price for premature redemption due on November 19, 2022 (November 20, 2022, being a Sunday) shall be Rs 5,298 per unit of SGB based on the simple average of closing gold price for three business days i.e., November 16, 17, and 18, 2022.


SGBs are gold bonds issued by the RBI on behalf of the Indian government. The gold in this bond is sold on a unit-by-unit basis, with each unit’s value derived from the underlying 1 gm of 999 quality gold. The price is determined by averaging the closing gold prices for the three working days before the subscription period.


SGB can be purchased from banks, brokers, post offices, and online platforms. The bonds can be purchased in physical, digital, or dematerialized form. To encourage investors to acquire SGBs online, a discount of Rs 50 per gm is granted to those who do so digitally. In addition, the RBI issues certificates to all investors.


Throughout the year, RBI releases a fresh series of SGBs for sale in the market. So, if you missed the most recent one, you can always wait for the next one when it is released. Investors who do not wish to purchase directly from the RBI can do so in the secondary market, which includes stock exchanges.


Source: Outlook India


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