Redemption of Sovereign Gold Bonds

February 9, 2022

Reserve Bank of India (RBI) announced redemption price for the premature redemption of Sovereign Gold Bonds (SGBs), which was due on February 8, 2022.

Key Facts

The redemption price was Rs 4,813 per unit. It is around 85% premium from its issue price of Rs 2,600, which was fixed in January 2016.
Redemption price was set on the basis of simple average of closing gold price for January 31- February 04, 2022.

What are SGBs?

SGBs are government securities, which are denominated in grams of gold. They are substitutes for physical gold. Investors are required to pay the issue price in cash and bonds are redeemed in cash after maturity. The Bond is issued by RBI, on behalf of Government of India. As per government’s notification, redemption may be permitted after fifth year from the date of issue of SGBs, on the date on which interest is payable. In January 2016, government issued second tranche of government’s gold bond scheme.

When was the scheme launched?

The Gold Bond Scheme was launched in November 2015. First tranche of sovereign gold bonds was available for purchase in November, 2015.

How redemption price is set?

The redemption price of SGB is set on the basis of simple average closing gold price of 999 purity, of the week preceding the date of redemption.

About Sovereign gold bonds

Sovereign gold bonds are government securities. They are denominated in grams of gold.

Sovereign gold bond scheme

Sovereign gold bond scheme was launched in November 2015, with the objective of reducing the demand for physical gold. The scheme also seeks to shift a part of domestic savings, which is used for purchase of gold, into financial savings. Bonds are offered for sale on Issue price, when they first become available to the public.