Investors holding certain Sovereign Gold Bond (SGB) tranches are set to earn strong returns as the premature redemption window opens. The Reserve Bank of India (RBI) has announced the early redemption price for SGB 2020-21 Series VI and Series XII, which are due for redemption in March 2026.
According to the latest announcement, the redemption price has been fixed at around Rs 16,063 per unit, based on the average price of 999-purity gold over the previous three working days.
For investors who had put Rs 1 lakh into the SGB 2020-21 Series VI tranche, the value of their investment has risen to about Rs 3.48 lakh, translating into a gain of more than three times the original amount. The surge reflects the sharp rise in gold prices over the past few years.
Strong Returns for Investors
The SGB 2020-21 Series XII tranche is also delivering impressive gains. Investors in this tranche are expected to see absolute returns of around 248 percent, while the Series VI tranche offers gains of about 217 percent, excluding interest income.
Interest Benefit on Top
Apart from capital appreciation linked to gold prices, SGB investors also earn a fixed interest of 2.5 percent per year, which is paid semi-annually on the initial investment amount.
What Are Sovereign Gold Bonds?
Sovereign Gold Bonds are government-backed securities issued by the RBI on behalf of the Government of India. They are denominated in grams of gold and provide investors exposure to gold prices without the need to hold physical gold.
These bonds have an eight-year maturity period, but investors are allowed to exit early after completing five years, on the interest payment dates specified by the RBI.
