SGB 2020-21 Series-III premature redemption date today; check details

The Reserve Bank of India (RBI) has announced the premature redemption date for the Sovereign Gold Bond (SGB) 2020-21 Series-III, which was issued on June 16, 2020, as June 16, 2026.

“The next due date of premature redemption of the above tranche shall be on June 16, 2026,” the RBI said in a press release.

According to RBI rules, redemption in Sovereign Gold Bonds is allowed after the fifth year from the date of issue of the bond, on the date on which interest is payable.

Based on the simple average of the closing price of gold over the previous three business days, the India Bullion and Jewellers Association Ltd (IBJA) notifies the premature redemption price. Accordingly, taking into account the closing price of the last three business days i.e. June 15, June 12 and June 11, the IBJA has notified the redemption price at ₹14,774 per unit of SGB for investors making an early exit.

The SGB has a maturity term of 8 years from the issue date.

Investors who invested in the SGB tranche through the online route could earn returns of up to 219%. At the time of subscription, the issue was priced at ₹4,627 per gram for online investors, while other investors could get it for ₹4,677 per unit of SGB.

Importantly, the gains are over and above the 2.5% interest that is paid on gold bonds annually.

Gold prices are hovering near record highs, helping investors exiting the SGB investment early get a decent redemption price. Lately, the sharp gains in the precious metal were seen in the backdrop of a tentative US-Iran deal. However, as investors now await greater clarity on the proposed US-Iran deal, gold prices are largely steady today.

When and how can you exit SGB investment prematurely?

According to RBI FAQs, in case of premature redemption, investors can approach the concerned bank/SHCIL offices/Post Office/agent thirty days before the coupon payment date.

Requests for premature redemption can be entertained only if the investor approaches the concerned bank/post office at least one day before the coupon payment date.The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond. The redemption proceeds will be credited to the customer's bank account provided at the time of applying for the bond.