Over 240% Returns on Gold! RBI Allows SGB Early Exit At Rs 9630 Per Unit From 2017 Tranche

Sovereign Gold Bonds: The Reserve Bank of India has announced the early redemption of sovereign gold bonds (SGBs) for investors who had invested in schemes on December 11, 2017, and June 11, 2019. These SGBs are eligible for premature redemption on Wednesday, June 11. Redemption of these SGBs today, would give investors a massive return of over 240% on their investment.

The RBI has fixed Rs 9646 per unit of SGB as the redemption price for SGB schemes SGB 2017-18 Series XI And SGB 2019-20 Series I. This would mean, that a person who had invested in these RBI SGBs will earn a massive return of 240%.

"In terms of GOI Notification F.No.4(25) - W&M/2017 dated October 06, 2017 (SGB 2017-18 Series XI-Issue date December 11, 2017) and in terms of GOI Notification F.No.4(7) - B(W&M)/2019 dated May 30, 2019 (SGB 2019-20 Series I-Issue date June 11, 2019) on Sovereign Gold Bond Scheme, premature redemption of Gold Bond may be permitted after fifth year from the date of issue of such Gold Bond on the date on which interest is payable. Accordingly, the next due date of premature redemption of the above tranches shall be on June 11, 2025," read a press release by the RBI issued this week.

RBI SGB Return: How Much Will You Get?

As per the RBI's recent notice, investors would get a return of around Rs 9646 per unit of SGB on their investment of around Rs 2685 (estimated). RBI announced the early SGB redemption price based on the average of the closing price of gold price of 999 purity of previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA).

"The redemption price of SGB shall be based on simple average of closing gold price of 999 purity of previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for premature redemption due on June 11, 2025, shall be ₹9646/- (Rupees Nine Thousand Six Hundred and Forty-Six only) per unit of SGB based on the simple average of closing gold price for the three business days i.e., June 06, June 09, and June 10, 2025," RBI added in its press release.

What is RBI Sovereign Gold Bond Scheme?

RBI's Sovereign Gold Bond (SGB) scheme is one of the safest option for investors to park their money in physical gold without worrying much about its safety and storage. RBI's SGB are issued on behalf of the Indian government. According to the RBI's official website, sovereign gold bonds are denominated in grams of gold. Investors pay for SGB investment in cash and receive cash at the time of maturity.

What is the Benefit of SGB Investment?

While there are multiple ways of investing in gold, from ETFs to mutual funds, SGBs emerges as the safest option of parking money on the precious metal. The value of the gold is protected as investors receive the market price at redemption. Additionally, SGBs do not incur making charges or purity issues like jewellery. These bonds are stored in RBI's records or in demat form, reducing the risk of loss.

RBI SGB: Who Is Eligible For RBI Sovereign Gold Bond?

Indian residents under the definition provided by Foreign Exchange Management Act, 1999 (FEMA) are eligible for investment in SGBs. Additionally, individuals, HUFs, trusts, universities, charitable institutions, etc can also invest in RBI SGBs.