The premature redemption price of Sovereign Gold Bond (SGB) 2017-18 Series XII would be Rs 6,199 per unit of SGB, according to a press release by the Reserve Bank of India (RBI) dated December 15, 2023.
“The redemption price of SGB shall be based on the simple average of closing gold price of 999 purity of previous three business days from the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for premature redemption due on December 18, 2023 shall be Rs 6199/- (Rupees Six thousand one hundred and ninety nine only) per unit of SGB based on the simple average of closing gold price for three business days, i.e., December 13-15, 2023,” said the RBI in the press release.
The due date for tendering the specified SGBs is December 18, 2023, said the RBI. It must be noted that this particular SGB was issued in 2017 and is currently in its sixth year. Every Sovereign Gold Bond is issued for a term of eight years with premature withdrawal from that SGB possible from the fifth year from the date of issue of interest payment dates onwards.
How much return SGB investors would earn if prematurely withdrawn now?
This particular SGB 2017-18 Series XII was issued at Rs 2,890 per unit in December, 2017. Each unit of SGB represents one gram of gold. So the absolute return comes to Rs 6,199 – 2890= Rs 3,309 (without factoring in the interest). In percentage terms, the absolute return comes to Rs (3,309/2890) *100 %= 114.4982%.Hence if an investor of SGB 2017-18 Series XII decides to prematurely withdraw their investment, then stand to gain an return of 114.4982% on their investment.
How to prematurely withdraw from SGB 2017-18 Series XII scheme?
Individuals holding units of SGB 2017-18 Series XII have to apply for prematurely withdrawing from the scheme. However the point of contact where the premature withdrawal application is to be submitted would vary depending upon where the SGB was held i.e. demat or non-demat.
Non-demat mode of holding SGB units: “In case of premature redemption, investors can approach the concerned bank/SHCIL offices/Post Office/agent thirty days before the coupon payment date. Request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond,” as per RBI’s frequently asked question (FAQ).
Demat mode of holding SGB units: An individual who purchased and held SGBs in demat mode must fill up the redemption form and send it to their stock broker. However the time limit for doing so would vary from one stock broker to another. For example, Zerodha mandates that their customers send in the SGB redemption form duly filled up at least 10 working days before the respective SGB’s interest payment date.
