According to the RBI press release dated December 15, 2023, “The nominal value of the bond based on the simple average of closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. December 13, December 14, and December 15, 2023 works out to Rs 6,199/- (Rupees Six thousand one hundred and ninety nine only) per gram of gold.”
The government has set a fixed interest rate of 2.5 percent per year on the investment, with no compounding of interest. The interest will be paid in half-yearly increments, with the last installment due along with the principal at maturity. However, premature withdrawal is possible five years from the issue date on interest payment dates.
Planning on investing in SGB? Here’s how the interest will be paid on the Sovereign Gold Bond subscription amount
The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions. The SGBs will be denominated in gram(s) of gold multiples, with a fundamental unit of one gram. The term of these bonds will be eight years, with an option to redeem early after the fifth year on the day interest is payable.
The bonds will be sold through banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices, and recognised stock exchanges — the NSE and the BSE.The price of the bond is fixed in Indian rupees on the basis of simple average closing price of gold of 999 purity, published by the India Bullion and Jewellers’ Association Ltd for the last 3 working days of the week preceding the subscription period.The government also provides a discount of Rs 50 per gram less than the nominal value to investors who register online and pay for the application using digital means.
What is the redemption price of first launched in SGB 2015-I
The final redemption amount, which was due on November 30, 2023 Rs 6132 for each SGB unit. This amount is determined by using the simple average of the closing gold price for the week of November 20–24, 2023.
Assume that an investor obtained 35 grams of gold during the initial SGB offering. The investment amount is equal to Rs 93,940 because it was made at a cost of Rs 2,684. With a redemption price of Rs 6,132 per gram, the investor will receive Rs 2,14,620.
In absolute terms, an individual will earn a return of 128.5% without taking interest earned on the SGB into account. In CAGR (Compounded annual growth rate) terms, the returns come out to be 10.88%.
