SGB Investors To Get 329% Return? Final Redemption Price For Sovereign Gold Bond 2017-18 Series-VII Declared
Since the bonds are linked to the market price of gold, investors can potentially benefit through capital appreciation if the price goes up while the investor is holding the bond.
The Reserve Bank of India has released the final redemption price for Sovereign Gold Bonds 2017-18 Series, which was issued on Nov. 13, 2017, with a tranche due date on Nov. 13, 2025, according to an RBI notification.
The SGBs have a tenure of eight years with an early exit option available after the fifth year, enabling investors to either hold the bonds until maturity or to liquidate the investment partially once the lock-in period gets over.
"The Gold Bond shall be repayable on the expiration of eight years from the date of its issue. Accordingly, the final redemption date of the above tranche shall be November 13, 2025," the RBI notification said.
Since the bonds are linked to the market price of gold, investors can potentially benefit through capital appreciation if the price goes up while the investor is holding the bond.
Besides this, investors receive a fixed annual interest on their investments, which depends on the final redemption price.
For this particular series, the final redemption price has been announced as Rs 12,350 per unit of SGB. The final return percentage will be calculated by deducting the original issue price from the redemption price.
The series in question had the issue price of Rs 2,884 after discount. Therefore, the absolute return comes about as — Rs 12,350-2,884 = Rs 9,466.
In percentage term, this translates to 9,466 divided by 2,884 x 100 = 328.22%.
Where Can You Buy SGBs? Key Things To Know
Once the lock in period of five year ends, these bonds are listed on the stock exchanges from where they can be traded like stocks if held in a demat account, and can be transferred to any other eligible investor.
In case an investor wants to redeem their SGB prematurely, they need to be aware about the issue date to know which tranche their bonds belong to and also be punctual and submit their premature redemption request by the deadline.
