New Delhi, Aug 11
The Reserve Bank of India (RBI) has announced the premature redemption price for two tranches of Sovereign Gold Bonds (SGBs) due on August 11, 2025.
The 2019-20 Series IX (issued in February 2020) and the 2020-21 Series V (issued in August 2020) can be prematurely redeemed at Rs 10,070 per gram. SGBs have an eight-year maturity, but investors can opt for premature redemption from the fifth year onwards.
Investors in the February 2020 SGB tranche achieved a compounded annual growth rate (CAGR) of 20 per cent. The August 2020 tranche delivered a 13.5 percent CAGR to investors over five years.
These returns are in addition to 2.5 per cent annual interest paid semi-annually, which increases the effective yield.
The returns from these tranches mirror gold’s returns over the last five years. In February 2020, when RBI released the 2019-20 Series IX tranche, the gold was priced at Rs 4,070 per gram, just before the pandemic spurred a flight to safe-haven assets.
When the Reserve Bank of India (RBI) issued the second tranche (2020-21 Series V) in August 2020, global uncertainty and interest rate cuts caused prices to rise to Rs 5,334 per gramme.