The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond SGB 2021-22 Series-I-Issue date May 25, 2021. According to a statement from the Central Bank, investors will have the option to redeem this SGB tranche prematurely from May 25, 2026.
The premature redemption of the SGB series will be permitted after the fifth year from the date of issue of such gold bonds on the date on which interest is payable, as per a Reserve Bank of India (RBI) statement.
How is SGB redemption price calculated?
The redemption value will be calculated based on the simple average closing price of the gold of 999 purity published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days, as per the rule.
What is the premature redemption price for SGB 2021-22 Series-I?
The premature redemption price due on May 25, 2026, has been fixed at Rs 15,840 per unit of SGB, based on the simple average of the closing price of gold for the last three business days, i.e., May 20, May 21 and May 22, 2026.
What was the issue price of SGB 2021-22 Series-I?
The SGB 2021-22 Series-I was issued at Rs 4,727 per gram for online bonds. The issue price of the bond during the subscription period was Rs 4,777 per gram for offline bonds. A Rs 50 discount was available on the online purchase of the SGB.
It will yield an absolute simple return of 235% on the date of premature redemption.
The absolute return comes to be Rs 15,840 -Rs 4,727 = Rs 11,113 (without factoring in the interest). In percentage terms, it is 11,113÷ 4,727 ×100 = 235.09%.
A 235% return means the investment grew to about 3.35 times the original amount (100% original investment + 235% gain).
So, if a person invested Rs 1 lakh in the SGB series in 2021, its value would now be nearly Rs 3.35 lakh.
What is Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The bond is issued by the RBI on behalf of the Government of India.
What is the rate of interest and how will the interest be paid?
The bonds bear interest at the rate of 2.50% (fixed rate) per annum on the amount of the initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
When are SGB customers issued a certificate of holding?
SGB customers are issued a certificate of holding on the date of the issuance of a SGB series. The certificate of holding can be collected from the issuing banks/SHCIL offices/post offices/designated stock exchanges/agents or obtained directly from the RBI on an email if an email address is provided in the application form.
