Investors in the Sovereign Gold Bond (SGB) schemes from Series VII of 2017-18 and Series III of 2018-19 have seen significant gains, as the Reserve Bank of India (RBI) set the premature redemption price at ₹7,637 per unit. This redemption option became available for eligible withdrawals on November 13, 2024.

For those who invested in the 2017-18 Series VII at an issue price of ₹2,934 per gram, the redemption price of ₹7,637 per unit reflected a gain of approximately 160%.

Likewise, investors in the 2018-19 Series III, originally priced at ₹3,183 per gram, experienced gains of around 140%.

These returns are calculated without considering the annual interest of 2.50%, which was paid biannually throughout the bond’s tenure.

How the redemption price is calculated

The redemption price for SGBs

is based on the simple average of the closing gold prices of 999-purity over the three business days preceding the redemption date.

For these tranches, the price was averaged from the closing gold rates on November 8, November 11, and November 12, 2024, as published by the India Bullion and Jewellers Association Ltd. (IBJA).

This method ensures that the redemption price accurately reflects recent market conditions.

What investors should know

Premature redemption in the SGB scheme is permitted only after the fifth year of investment, on specific dates when interest payments are due.

Investors seeking liquidity before maturity can take advantage of these dates, subject to prevailing gold prices.

For those continuing to hold SGBs beyond the premature redemption window, the bonds offer capital gains that are tax-free upon maturity, along with an annual interest payout.