Holders of Sovereign Gold Bonds (Series VII) issued on November 2, 2021, may opt for premature redemption on November 2, 2026, the fifth interest payment date. Redemption price will be based on the simple average of weekly closing gold prices.
SGB Premature Redemption Scheduled for November 2, 2026
The Reserve Bank of India, in accordance with the Government of India notification F.No. 4(5)-B(W&M)/2021 dated October 21, 2021, has announced that premature redemption for the Sovereign Gold Bond (SGB) 2021-22 Series VII will be permitted on November 2, 2026. The bonds were originally issued on November 2, 2021, and the premature redemption window opens after the completion of five years, aligning with the date of interest payment.
Under the SGB Scheme, investors are allowed to redeem their bonds prematurely only after the fifth year from the issue date, specifically on interest payment dates. The redemption price will be determined based on the simple average of the closing price of 99.5% pure gold, published by the India Bullion and Jewellers Association Ltd., for the previous three weeks. This mechanism ensures transparency and fairness in valuation.
Implications for Investors
Investors holding SGBs should assess current gold prices against purchase cost before exercising the premature redemption option. Since capital gains on SGBs are tax-free, this redemption opportunity presents a favorable exit route compared to physical gold. However, early redemption foregoes future interest payments, so a cost-benefit analysis is recommended. Banks and post offices will accept redemption requests on or before the due date under prescribed procedures.
Citations
- Government of India Notification F.No. 4(5)-B(W&M)/2021, dated October 21, 2021
