RBI allows early redemption in Sovereign Gold Bond Scheme, 2017-18 Series III

Investors in the Sovereign Gold Bond (SGB) Scheme of 2017-18, series III have been allowed early redemption by the Reserve Bank of India. The next redemption date is set for April 16, 2024, for the SGB 2017-18 Series III by RBI. The press statement of the RBI says early redemption price has been fixed at Rs 7260/- per unit of SGB, based on the average closing gold price over the previous three business days.

The Government of India, in line with the Sovereign Gold Bond Scheme regulations permits premature redemption of Gold Bonds after the fifth year from the date of issue. This redemption option aligns with the date on which interest is payable on the bond. The redemption price calculation is based on the simple average of the closing gold price for the three business days preceding April 16, 2024, as published by the India Bullion and Jewellers Association Ltd (IBJA).

The Sovereign Gold Bond Scheme, was launched under the Government Securities Act, 2006, to give investors a choice of structured avenue to invest in gold. Various entities, including individuals, trusts, charitable institutions, and universities, were allowed to invest in the scheme. The denomination of the bonds was in units of one gram of gold or multiples thereof, with a minimum subscription limit of one gram. Individuals were allowed to opt for up to 4 kg per fiscal year, while trusts and similar entities were given a higher ceiling of 20 kg.

The premature redemption option offers investors flexibility, to liquidate their investments ahead of the maturity date if needed. Pre mature encashment option, along with other benefits like interest payments and tax advantages, had made the Sovereign Gold Bond Scheme an attractive investment avenue for individuals and entities looking to diversify their portfolios with gold-backed securities.