Sovereign Gold Bond: RBI's Premature Redemption For 2017 Series 3 Offers 212% Return For Investors

Investors holding Series III of the Sovereign Gold Bond issued on Oct. 16, 2017, can prematurely redeem their SGBs on April 16, according to a circular from the RBI.

The redemption price for this series has been fixed at Rs 9,221 per unit of gold bonds. This price marks a 212% gain over the bond issue price of Rs 2,956 per unit at the time of issue. Moreover, investors have earned a bi-annual interest of 2.5% on the bond since its issue at the prevailing gold price, making absolute returns even more attractive.

The premature withdrawal option is available as per the terms outlined in the RBI notification issued on Oct. 6, 2017, which permits premature encashment.

This price is calculated based on the simple average of the closing gold price of 999 purity for the three preceding business days, specifically April 9, April 11, and April 15, 2025. The pricing data is sourced from the India Bullion and Jewellers Association Ltd., according to RBI.

The central bank allows investors to prematurely redeem the SGB after five years of issue. These repayment windows occur on the next interest payment date, which happens twice a year.

This option is available on the interest payment dates, providing investors an opportunity to access liquidity before the bonds reach their full maturity.

By allowing early redemption, the scheme ensures that investors can benefit from favourable market conditions or address urgent financial requirements without having to wait for the full term of the bond.

The full term for an SGB is eight years from the date of issue. If investors choose to hold the bonds until maturity, they will receive the redemption amount based on the prevailing gold price at that time. The interest on these bonds is paid semi-annually, providing a regular income stream in addition to the potential capital appreciation from gold price movements.