What is the RBI's Redemption Price for Gold Bonds?
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Synopsis
The RBI has set an enticing redemption price for Sovereign Gold Bonds. Investors can now redeem their bonds at Rs 12,198 per unit, reflecting a significant increase since their issuance. This development not only highlights the rising value of gold but also provides an attractive investment opportunity as the bond approaches maturity.
Key Takeaways
- Redemption Price: Rs 12,198 per unit for SGB 2020-21 Series-I.
- Interest Rate: Investors earn a fixed interest of 2.5% annually.
- Premature Redemption: Allowed after five years from the issue date.
- Investment Growth: Significant increase in bond value since issuance.
- Trading Options: SGBs can be traded or used as loan collateral.
Mumbai, Oct 28 (NationPress) The Reserve Bank of India (RBI) has set a redemption price of Rs 12,198 per unit for the early redemption of the Sovereign Gold Bond (SGB) 2020-21 Series-I, which is dated October 28, 2020. Investors will be able to redeem this SGB tranche starting from Tuesday, as stated by the RBI.
The RBI elaborated that the redemption price is determined based on the simple average of the closing prices of gold at 999 purity, as reported by the India Bullion and Jewellers Association (IBJA).
According to this calculation, the premature redemption price for the Sovereign Gold Bond (SGB) 2020-21 Series-I, which will mature on October 28, 2025, has been set at Rs 12,198 per unit. This figure is derived from the simple average of gold's closing prices over three business days: October 23, 24, and 27, 2025.
When this series was originally launched, those who applied online paid Rs 4,589 per gram, while offline purchasers paid Rs 4,639 per gram. Now, at the current redemption price, the value has nearly tripled over the five-year span. Additionally, investors in these bonds have accrued annual interest throughout this duration.
The RBI also clarified that the early redemption of the SGB series is allowed after the five-year mark from the bond's issuance, specifically on the date when interest is due.
The SGB Scheme was initiated by the government in November 2015 as a modern investment alternative in gold. These bonds, issued by the RBI on behalf of the government, are denominated in grams of gold and provide investors with a fixed annual interest rate of 2.5% based on the issue price, in addition to gains resulting from the rise in gold prices. The scheme aims to mitigate gold imports, which contribute to a significant outflow of foreign exchange, thereby widening the current account deficit. Furthermore, the bonds facilitate the channeling of household savings into financial instruments.
These bonds have a fixed duration of eight years, but investors can choose to exit after five years on the interest payment date. SGBs are also tradable on stock exchanges, can be transferred to other individuals, or can serve as collateral for bank loans.
Point of View
I observe that the recent announcement by the RBI regarding the redemption price for Sovereign Gold Bonds is a strategic move that underscores the growing value of gold investments. This initiative not only benefits investors but also aligns with national economic objectives by channeling household savings into productive financial assets.
NationPress
03/11/2025
Frequently Asked Questions
What is the redemption price for Sovereign Gold Bonds?
The redemption price for Sovereign Gold Bonds is set at Rs 12,198 per unit.
When can investors redeem their gold bonds?
Investors can redeem their gold bonds prematurely starting from the date specified by the RBI, which is after the fifth year from the issue date.
What interest rate do Sovereign Gold Bonds offer?
Sovereign Gold Bonds offer a fixed annual interest rate of 2.5% on the issue price.
Can Sovereign Gold Bonds be traded?
Yes, Sovereign Gold Bonds can be traded on stock exchanges, transferred to others, or used as collateral for loans.
When was the SGB scheme introduced?
The SGB scheme was introduced by the government in November 2015.
