The Government of India (GOI) has released details regarding the premature redemption of Sovereign Gold Bonds (SGBs) issued under the 2019-20 Series IX. According to a notification dated September 30, 2019 (F.No.4(7)–B(W&M)/2019), investors who purchased these bonds can opt for premature redemption starting February 11, 2025. This date marks the completion of the fifth year from the bond’s issue date, which was February 11, 2020.
Key Details of Premature Redemption
- Eligibility for Premature Redemption:
Investors can redeem their Sovereign Gold Bonds prematurely after the fifth year from the date of issue. The next due date for premature redemption for the 2019-20 Series IX bonds is February 11, 2025. This option is available only on the dates when interest payments are due. - Redemption Price Calculation:
The redemption price for these bonds is determined based on the simple average of the closing gold price (of 999 purity) for the three business days before the redemption date. The prices are published by the India Bullion and Jewellers Association Ltd (IBJA). For the premature redemption due on February 11, 2025, the redemption price has been fixed at ₹8,499 per unit of SGB. This price is based on the average closing gold prices for February 6, February 7, and February 10, 2025.
What This Means for Investors
Investors who hold Sovereign Gold Bonds from the 2019-20 Series IX can choose to redeem their bonds prematurely starting February 11, 2025. The redemption price of ₹8,499 per unit reflects the average gold price over the three business days leading up to the redemption date. This ensures that the redemption value is closely tied to the prevailing market price of gold.
What are Sovereign Gold Bonds
Sovereign Gold Bonds are government-backed securities that allow investors to invest in gold without physically holding it. These bonds offer an alternative to physical gold, providing investors with the benefits of gold ownership along with additional features like interest earnings and tax exemptions on capital gains (if held until maturity).
The bonds have a maturity period of eight years, but investors can opt for premature redemption after the fifth year. Interest on these bonds is paid semi-annually at a fixed rate of 2.5% per annum on the initial investment amount.
Why This Matters
The premature redemption option provides flexibility to investors who may need liquidity or wish to exit their investment after the fifth year. The government’s transparent method of calculating the redemption price ensures fairness and aligns the bond’s value with the current market price of gold.
Investors are advised to keep track of gold prices and redemption dates to make informed decisions about their investments. The next premature redemption date for the 2019-20 Series IX bonds is February 11, 2025, with the redemption price set at ₹8,499 per unit based on the average gold prices from February 6 to February 10, 2025.
This announcement is part of the government’s efforts to promote financial instruments like Sovereign Gold Bonds as a secure and profitable investment option for individuals looking to diversify their portfolios.