Sovereign gold bonds: RBI fixes final redemption for 2016 scheme, SGB holders to get 122% returns

The Reserve Bank of India (RBI), via a notification issued on Friday, August 2, fixed the final redemption price for a sovereign gold bond (SGB) scheme dating back to August 2016.

"The redemption price for the final redemption due on August 05, 2024 shall be ₹6,938/- per unit of SGB based on the simple average of closing price of gold for the week July 29 - August 02, 2024," the central bank stated.

This would provide a return of 122% to the SGB holders, as they purchased the units at a price of ₹3,119 per gram in August 2016.

The final redemption date for the scheme has been fixed as August 5, 2024.

Notably, the redemption price of SGB is based on the simple average of 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 Ltd (IBJA).

To further make the scheme attractive, the government offers an annual interest of 2.5% to the bond holders.

The source who spoke to the publication said no alternative scheme was being planned, if the government ends up discontinuing the issuance of SGBs.

The report also comes in the backdrop of gold climbing sharply in the global market, amid geopolitical uncertainties. The escalating tensions in the Middle East has pushed gold futures in the US to nearly $2,500 an ounce.