Sovereign Gold Bonds available for early redemption on September 17
New Delhi: Investors holding an early series of Sovereign Gold Bonds (SGBs) have reason to celebrate, as the returns on these bonds, issued five years ago, have more than doubled, offering substantial rewards, media reports said.
SGBs are government-backed gold bonds issued by the RBI with an eight-year tenure.
However, there is a five-year lock-in period, allowing investors the option to exit early if they choose.
Although SGBs are listed on stock exchanges, they are not heavily traded. To provide an exit option, the RBI offers a buyback facility at the end of the fifth, sixth, and seventh years, according to a Moneycontrol report.
On September 17, 2024, two SGB series—SGB 2016-17 Series IV and SGB 2019-20 Series IV—were eligible for early redemption.
SGB 2016-17 Series IV, issued on March 17, 2017, at an issue price of Rs 2,943, had a premature redemption price set at Rs 7,196 after 7.5 years, yielding an extended internal rate of return (XIRR) of 14.5% (adjusted for coupon payments) for long-term holders, according to the report.
The SGB 2019-20 Series IV, launched on September 17, 2019, at an issue price of Rs 3,890, had a premature redemption price fixed at Rs 7,278 after five years, translating to an XIRR of 15.7% (adjusted for coupon payments).
Launched in November 2015, SGBs have since been issued in 67 tranches. Investors wishing to redeem their bonds prematurely can use the buyback facility available at the end of the fifth, sixth, and seventh years. Redemption requests can be submitted through RBI receiving offices, NSDL, CDSL, or the RBI Retail Direct platform.
In August, the RBI announced a calendar for premature redemption from October 2024 to March 2025. With 30 SGB series set for redemption in the next six months, investors should monitor these dates to ensure timely action.
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