Investors who bought the Sovereign Gold Bond (SGB) 2021-22 Series VI could see a major rise in the value of their investment. The Reserve Bank of India (RBI) has announced the premature redemption price for SGB 2021-22 Series VI due on September 7 at Rs 15,334 per unit.
SGBs are government securities in grams of gold issued by the RBI. They are substitutes for holding physical gold. Investors have to pay the issue price, and the bonds are redeemed and paid back to investors on maturity.
The SGB 2021-22 Series VI was issued at Rs 4,682 per gram for online investors in September 2021. A Rs 50 discount was available on the online purchase of these SGBs.
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When Can Investors Redeem SGB?
The SGB was issued on September 7, 2021, and investors can opt for premature redemption from September 7, 2026, after completing five years from the date of issue.
At the latest redemption price, the SGB has delivered an absolute return of around 228%, excluding the interest earned during the holding period. This means an investment of Rs 1 lakh made at the time of issue would be worth nearly Rs 3.28 lakh on redemption, excluding interest.
SGB Calculation
The gold bond series redemption value is calculated based on the simple average closing price of 999-purity gold published by the India Bullion and Jewellers Association (IBJA) for the last three business days. For this redemption, prices from September 2, September 3 and September 4, 2026, were considered.
For some SGB investors also receive 2.5% annual interest on the initial investment, paid every six months. Therefore, the total return for investors who have held the bond includes both the rise in gold-linked value and the interest received over the years.
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