Sovereign Gold Bond Scheme: The Reserve Bank of India (RBI) has declared the premature redemption price of the Sovereign Gold Bond Scheme issued on February 12, 2019, for Series 6 of 2018-19 (SGB 2018-19 Series VI). Investors in this series will receive a redemption price of Rs 6,927 per gram, marking a significant return of 108% on their initial investment of Rs 3,326 per gram. The premature redemption is set for August 12, 2024.
Redemption Details and Calculation Method
In its press release on August 9, 2024, the RBI clarified that the option of premature redemption becomes available to investors five years after the bond’s issuance. This option is aligned with the schedule of interest payments. The redemption price is based on the average closing price of 999 purity gold over the three trading days preceding the redemption date. This average is published by the India Bullion and Jewelers Association Ltd. For this redemption, the price was calculated using the closing prices from August 7 to August 9, 2024.
Impact of Custom Duty Reduction on Gold Prices
The reduction in custom duty on gold, from 15% to 6%, as announced in the July 23, 2024, budget for the financial year 2024-25, has led to a decrease in gold prices, thereby affecting the returns on sovereign gold bonds. Despite the reduction, investors in the SGB 2018-19 Series VI still enjoy a robust return on their investment.
RBI’s Previous Redemption Announcement
The RBI had recently announced the redemption price for the SGB 2016-17 Series I, setting it at Rs 6,938 per gram. This consistency in providing returns underscores the bond’s viability as a secure investment option.
Looking Ahead
As the RBI continues to offer these options, investors remain keenly observant of market movements and regulatory changes that can impact their returns. The Sovereign Gold Bond Scheme continues to be an attractive investment vehicle for those seeking to diversify their portfolios and hedge against market volatility.
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