Big gains for sovereign gold bond holders: RBI sets final redemption price; 338% return on SGB 2017-18 Series-III
The Reserve Bank of India (RBI) on Thursday announced the final redemption price of Rs 12,567 per gram for the Sovereign Gold Bond (SGB) 2017-18 Series III, which is set to mature on October 16, 2025.The tranche, originally issued on October 16, 2017, had been open for subscription between October 9 and 11, 2017. The SGBs come with an eight-year tenure, though investors are allowed to exit after the fifth year from the date of issue, as per RBI guidelines.
Final redemption price
The final redemption value was determined based on the simple average of gold’s closing price (999 purity) for the three business days preceding the maturity date: October 13, 14, and 15, 2025, as published by the India Bullion and Jewellers Association Ltd (IBJA).This final price marks a massive jump from the issue price of Rs 2,866 per gram, translating to a 338% absolute return over eight years, excluding the 2.5% annual interest that SGB investors earn.In rupee terms, investors will gain about Rs 9,701 per gram, taking the total redemption value to Rs 12,567, as per the RBI’s notification issued in accordance with the Government of India Notification F.No.4(25)-W&M/2017.
SGB: A secure alternative to physical gold
The Sovereign Gold Bond scheme, managed by the RBI on behalf of the government, provides investors with a paper or demat-based investment option linked to gold prices. It eliminates concerns around storage, purity, and theft, while also offering biannual interest payouts.The bonds are tradable, transferable, and can be used as loan collateral. Investors looking for early liquidity can redeem their bonds after five years from the issue date, but only on interest payout dates.
