3 Sovereign Gold Bonds (SGB) are due for premature redemption in April 2025; check details

Three Sovereign Gold Bonds are due for premature redemption in April 2025, offering investors significant returns. Calculations show potential earnings, excluding interest, as high as 199% depending on the series.

In April 2025, investors holding specific Sovereign Gold Bonds (SGBs) from the 2017-18 series will have the opportunity for premature redemption. The bonds affected include SGB 2017-18 Series III, IV, and V, with redemption dates set for April 16, April 23, and April 30 respectively. These bonds were initially issued at prices ranging from Rs 2,956 to Rs 2,987. Investors are advised to adhere to submission deadlines to ensure smooth processing of their redemption requests. This strategic exit point is particularly relevant as gold prices have recently reached new highs, prompting many to consider their potential returns. 

Early Redemption Option for Sovereign Gold Bonds

Investors in Sovereign Gold Bonds (SGBs) have the option to redeem their bonds prematurely after five years from the date of issue. Although the SGB tenure is 8 years, early redemption can be made on specific coupon payment dates designated by the Reserve Bank of India (RBI).

To redeem their SGBs early, investors must submit a redemption request at least 30 days prior to the coupon payment date through their issuing bank, post office, or Stock Holding Corporation of India Limited (SHCIL). The redemption price will be determined based on the average closing price of 999-purity gold over the last three business days, as per the rates provided by the Indian Bullion and Jewellers Association (IBJA).

Early redemption of Sovereign Gold Bonds is allowed after five years from the issue date on specific coupon payment dates. Investors must submit their redemption requests well in advance through their issuing bank or authorized agent, as per the guidelines set by the RBI.

Premature redemption price

According to the SGB scheme rules, the redemption price is calculated as a simple average of the closing price of gold of 999 purity over the three business days prior to the redemption date. Currently, if premature redemption occurs, the investor is likely to receive approximately Rs 8,841 per gram of gold. This pricing mechanism provides a clear indication of the potential returns investors might secure. The earnings for these bonds, which could result in returns as high as 199% for Series III, 195% for Series IV, and 197% for Series V, excluding interest payments, a report in the Economic Times noted.

Premature redemption process

Investors planning to redeem their bonds prematurely must submit their requests to authorised receiving offices, including NSDL, CDSL, or RBI Retail Direct. For Series III, requests must be submitted between March 17 and April 7. Series IV requests are due between March 24 and April 15, while Series V requests should be filed between March 31 and April 21. These windows ensure that investors' requests are processed in a timely manner, allowing them to benefit from their investments ahead of the original maturity. 

The redemption process requires investors to verify and update any changes in their personal details with their banks or depositaries to avoid any disruptions during the redemption process. The maturity proceeds are directly credited to the investor's bank account as per the recorded details. Ensuring this information is accurate is crucial for a seamless transaction.