Sovereign Gold Bonds: All About Their Redemption

And these bonds issued by the RBI on behalf of the government of India have a maturity time frame of 8 years and redemption will also be in cash against the initial investment. Further upon maturity, investor will get the last interest payment installment together with the principal amount. When talking about the redemption price, upon maturity against SGBs individual will get price basis the simple average of closing price of last three business days of gold of 999 purity from the repayment date as published by the India Bullion and Jewelers Association Limited

What is the process involved in redemption at maturity of SGBs?

SGB investor will be given one month notice in advance on the ensuing maturity of the bond.

And on the maturity date, proceeds shall be credited into the bank account of the investor from which the investment was initially made or on record with the institution.

Further, in a case, there is change in any of the personal details such as e-mail, bank account etc. it should be promptly provided to the bank/Stock Holding Corporation of India Limited or Post Office.

Pre-mature withdrawal or redemption of SGBs

Now after the first two tranches were made available for early redemption, the ‘SGB 2.75% MAR 2024 TR-III’ (NSE symbol: SGBMAR24) is also due for early redemption on March 29, 2021.

Invested In SGB 2.75% March 2024 Tranche III- Available for premature redemption: What should you do given steep price correction of gold from record highs?

So, how should you deal with your investment in case in you invested in this third tranche of SGB: Here are detailed different aspects on the same:

Now simply, SGBs are bonds with a maturity term of eight years and a lock-in of 5 years. Though they can be traded in the secondary market after the end of the five year lock-in, the volume of trade in them is very low. So, to give a relaxation here or enable investors willing to redeem their investments prematurely, the RBI opens up the buyback window.

How to redeem SGB units?

For the redemption before maturity and after the lock-in period of 5 years is over, you need to inform the financial entity bank/PO/SGHCIL 10 days before the interest payment date and make a request for the same. And so now if you wish to redeem this particular third tranche that shall be available for early redemption on March 29, the request should be made by March 18, 2021.

And redemption price shall be decided as discussed above i.e. based on the average of closing price of gold of 999 purity of the last 3 business days from the repayment date as issued by the IBJA.

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