RBI FIXES SGB REDEMPTION RATE AT RS 8,624/UNIT FOR 2016-17 SERIES 4

MUMBAI: With gold prices soaring—crossing the sensitive USD 3000/ounce first time-ever early trade Friday in the international markets--the Reserve Bank has fixed the final redemption price for sovereign gold bonds (SGBs) due on March 17, at Rs 8,624/gram for the 2016-17 series IV issued on March 17, 2017.

“The redemption price of the SGB shall be based on the simple average of the closing price of gold of 999 purity of the week (Monday- Friday), preceding the date of redemption, as published by the India Bullion and Jewellers Association,” the RBI said in a statement.

It is not immediately clear how many tonnes of gold will be bought back and what the issue price.

Since the inception of the SGB scheme way back in November 2015, under the gold monetisation scheme to offer an alternative investment to physical gold, as much as 146.96 tonne of gold was issued/raised through 67 tranches, amounting to Rs 72,274 crore. Since July 2024, the RBI has announced premature redemption for SGBs issued between 2017 and 2020.

In FY24, investors bought Rs 27,031 crore worth of gold bonds or 44.34 tonne of gold, before the July budget, when the government announced the premature redemption along with a massive reduction the customs duty on the yellow metal imports—from 15% to a low 6% as gold prices were on steady climb. In 2024, the prices shot up more than 22%, while in 2025 so far it has gained over 14% and spot gold is trading over USD 3000/ounce in the international markets.

For the record, as of 1800 hrs IST the spot price of the metal was sniffing at USD 3,010 an ounce on the Chicago Mercantile Exchange.

The SGBs 2016-17 series IV was issued on March 17, 2017 under the sovereign gold bond scheme of the Centre and are repayable on the expiration of eight years from the date of issue. “Accordingly, the final redemption date of the above tranche shall be March 17, 2025,” the central bank said.

SGB 2016-17 series I, issued at Rs 3,119 on August 5, 2016, was redeemed in the first week of August 2024 at Rs 6,938/gram. The series II, issued at Rs 3,150 on September 30, 2016, was redeemed on September 30, 2024, at Rs 7,517, the third series, issued at Rs 3,007 on November 17, 2016, was redeemed on November 16, 2024, at Rs 7,788.

Two SGBs launched in 2016 have already matured in 2024 redeemed.

Since July 2024, the government has redeemed six tranches of SGBs, with 61 tranches remaining outstanding, and the final redemption is scheduled for February 2032.

The July 2024 budget projected that government liabilities on gold bonds would Rs 85,000 crore by the end of this fiscal year, almost nine times the number in FY20. The duty cut led to a massive 6% plunge in domestic gold prices hugely benefitting the government in redemption payout. Yet the first redemption gave the investor a premium of 122%.

The immediate past redemption was on February 11, 2025, at Rs 8,499/unit, which was a premature redemption, while the first tranche was in August 10, 2024 at Rs 6,938/unit.

In the first-ever SGB redemption on August 5, 2024 (issued on August 10, 2016) the RBI bought back 3.75 tonne and another 3.6 tonne on September 23, 2024, in the second tranche. In the third redemption it bought back 8 tonnes.

The SGBs yield an annual interest of 2.5% payable half yearly and the redemption price is the average weekly price of the metal in the previous trading week. The interest is taxable but no capital gains tax.

2025-03-14T14:21:47Z