If you had invested in the first tranche of Sovereign Gold Bond 8 years ago, then there is good news for you. The Reserve Bank of India (RBI) has released the final redemption price on maturity of the first Sovereign Gold Bond (SGBs) issued on 5 August 2016. RBI has fixed this price at ₹ 6,938 per gram. In August 2016, it was issued at a price of ₹ 3,119 per gram. RBI has also fixed the final redemption date for this as 5 August 2024 (Monday).
The price of Sovereign Gold Bond is determined by the India Bullion and Jewelers Association (IBJA) on the basis of 999 purity gold. It is determined on the basis of the average closing price in the week before the subscription for SGBs opens.
One scheme, many benefits
SGBs holders also get 2.5% interest on it on an annual basis. In this way, investors get the benefit of interest along with the rising price of gold. Apart from this, there is also the benefit of tax exemption on the amount received on redemption. This is the reason why Sovereign Gold Bond is seen as an attractive investment option for investors. When the government announced this scheme, the annual interest was fixed at 2.75%, which was later reduced to 2.5%. Investors can also take a loan by keeping this as collateral in a bank or any other financial institution.
Total benefit to investors
Based on the initial investment, this interest is paid twice a year in two different parts. In this way, investors are getting a total benefit of 144% on the Sovereign Gold Bond issued 8 years ago. If seen on an annual basis, this return is about 12% CAGR. The final interest on SGBs will be issued directly in the bank account of the investors.
Will the Sovereign Gold Bond Scheme be closed?
It has been discussed in many media reports for some time that the Narendra Modi government is preparing to close this Sovereign Gold Bond Scheme. Information received by CNBC-TV18 from sources has told that the final decision on this will be taken in September. A decision was taken on this in the RBI meeting regarding borrowing in September 2024.
