Investors in Sovereign Gold Bonds (SGBs) are celebrating significant returns as the Reserve Bank of India (RBI) has announced the final redemption price for the 2017-18 Series XIII. This particular series, issued on December 26, 2017, has reached its maturity date on December 26, 2025, marking the end of its eight-year tenure.
The RBI has set the final redemption price at ₹13,563 per unit of SGB. This price is based on the simple average of the closing price of gold of 999 purity for the three business days preceding the redemption date, specifically December 22, 23, and 24, 2025, as published by the India Bullion and Jewellers Association Ltd (IBJA).
For investors who purchased the SGB 2017-18 Series-XIII at its initial offering price of ₹2,866 per gram (₹2,816 for online purchases), this translates to an impressive return of approximately 382% over the eight-year period. This substantial increase does not even include the additional 2.5% annual interest that SGB holders receive. The interest is paid semi-annually and is taxable as per the investor's income tax slab.
The Sovereign Gold Bond Scheme, managed by the RBI on behalf of the Government of India, was designed as a substitute for holding physical gold. It allows investors to participate in the gold market without the concerns of storage and purity that come with physical gold. Upon maturity, the bonds are redeemed in Indian Rupees, with the redemption price linked to the market price of gold.
The procedure for SGB redemption is relatively straightforward. Investors are typically notified a month before the maturity date. On the date of maturity, the redemption proceeds are directly credited to the bank account associated with the bondholder's account. Bondholders should promptly inform their bank or relevant authority of any changes to their account details to ensure a smooth redemption process.
While the SGBs have a fixed tenure of eight years, the RBI provides an option for premature redemption after the fifth year from the date of issue, specifically on interest payment dates. This allows investors some flexibility to exit their investment should they need to. The bonds are also tradable and transferable on exchanges if held in demat form and can be used as collateral for loans.
The SGB scheme has proven to be a popular investment choice, offering a blend of security, returns linked to gold prices, and the convenience of a dematerialized format. The substantial returns realized on the maturity of the Sovereign Gold Bond 2017-18 Series-XIII highlight the potential benefits of investing in these government-backed securities.
