RBI’s SGBs due for premature redemption
SGB 2017-18 Series-XIII issued on Dec26, 2017 at`2,866/gm can be prematurely redeemed at Rs 13,563/gm
image for illustrative purpose
New Delhi: The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond (SGB) 2017-18 Series-XIII (SGBs) due on Friday. SGB 2017-18 Series-XIII issued on December 26, 2017 can be prematurely redeemed at Rs 13,563 per gram. SGBs have an eight-year maturity, but investors can opt for premature redemption from the fifth year onwards.
This SGB was issued at Rs 2,866 per gram without discount and investors achieved 381.6 per cent absolute simple return. These returns are in addition to 2.5 per cent annual interest paid semi-annually, which increases the effective yield. The final price is based on a simple average of the closing price of gold of 999 purity for the three business days. SGBs are government-backed securities denominated in grams of gold. They are considered as a digital alternative to holding physical gold and earning returns based on price appreciation and semi-annual returns. Investors can avoid capital gains taxes by holding SGBs until maturity or until the premature redemption date. The returns from these tranches mirror gold’s returns over the last five years.
