Investors holding the Sovereign Gold Bond (SGB) 2016-17 Series III, issued on November 17, 2016, will see the final redemption of their bonds on November 16, 2024. The redemption price is set at ₹7,788 per gram. Investors who purchased this SGB at its original issue price of ₹3,007 per gram in 2016 will realise a profit of ₹4,781 per gram on redemption.

This represents an approximate 159% return on their investment over the eight-year period.

This calculation excludes the annual interest rate of 2.50% paid biannually during the bond’s tenure.

How redemption price is calculated

The RBI sets the final redemption price based on the average closing price of 999-purity gold from the previous week, as reported by the India Bullion and Jewellers Association Ltd. (IBJA).

For this tranche, the average gold price between November 4 and November 8, 2024, determined the ₹7,788 rate.

Steps to redeem

Redemption proceeds will automatically be credited to the bank accounts linked to the demat accounts of bondholders. Investors do not need to take any additional steps if their bank and demat details are up-to-date.

However, they should verify account details and ensure there are no discrepancies to avoid delays.

If investors prefer not to redeem, they may also trade the bonds on stock exchanges, although the market price will vary with gold rates and demand.

Advantages of investing in SGB

Investing in Sovereign Gold Bonds offers several advantages:

Tax benefits: The capital gains from SGBs are exempt from tax at redemption, adding to the net returns for investors.

Security and ease: SGBs provide a secure and convenient way to invest in gold without the hassles associated with physical gold.

Government backing: As government securities, they offer an added layer of security and stability.