|
Getting your Trinity Audio player ready...
|
Sovereign Gold Bonds (SGBs) have an original tenure of eight years. But, if you find yourself in need of liquidity prior to maturity, then premature redemption is an option available to you based on the conditions defined by the SGB Scheme. It is advisable that you acquaint yourself with the procedure beforehand so that you do not fail to comply with the required deadline for submitting your application.
Disclaimer: The content presented here is purely meant for academic purposes. Redemption of Sovereign Gold Bonds needs to be in accordance with Reserve Bank of India (RBI) instructions.
Start investing with just ₹10K & grow your wealth with fixed return opportunities.
Invest Now
Who Can Redeem SGBs Before Maturity?
Early redemption is possible once five years have elapsed since issuance. You will be able to redeem your SGBs only on the interest payment days as prescribed by the RBI in respect of the particular SGB series. In case your SGB is less than five years old, you will either have to wait till it becomes eligible for early redemption or sell it in the secondary market, wherever applicable.
How to Redeem Sovereign Gold Bonds before Maturity
You can redeem Sovereign Gold Bonds (SGBs) prematurely through the Reserve Bank of India (RBI) on specific coupon payment dates after completing 5 years or by selling them instantly on the stock exchange (NSE/BSE) via your Demat account.
Step 1: Determine If Your SGB Series Is Eligible For Early Redemption
First, you will have to check whether the SGB series issued to you is eligible for early redemption. The redemption schedule released by the RBI contains information about the eligible SGB series and redemption date, along with the time period within which applications for premature redemption can be made.
Step 2: Redemption Request Submission
In case your bond is eligible, submit a request for redemption through the institution through which you had bought the SGB. This can include the following options: your bank, designated post office, SHCIL, RBI Retail Direct, or Depository Participant, if your bonds are in demat form. Usually, submission of the redemption request should happen at least 10 days before the due date.
Step 3: Verification Process
On receiving your request, the respective institution will go through the verification process and might need additional documentation from your side in case of any need. After successful verification, the process of redemption will be carried out in accordance with the RBI guidelines.
Latest Bond News:
- Step-by-Step Guide to Redeem Sovereign Gold Bonds Before Maturity
- Supply Pressure or Index Demand? Decoding RBI’s ₹32,000 Crore G-Sec Auction
- SGB Premature Redemption vs Selling on Stock Exchange: Which is Better?
Step 4: Get the Redemption Amount
The redemption amount will be credited to the account of the investor once the RBI makes the determination regarding the appropriate redemption price, which is calculated using the simple average of the closing price of 999 purity gold for the past three business days, as released by the India Bullion and Jewellers Association (IBJA). As the price of gold keeps fluctuating, the redemption price is calculated just days before the redemption date.
What to Keep in Mind Before Redemptions
Investors need to keep certain things in mind before redeeming the bonds. First of all, the SGB series being redeemed needs to be eligible for redemption, and the application needs to be made within the stipulated time period. Delaying the process can result in having to wait until the next eligible interest payment date.
Redeem Sovereign Gold Bonds Before Maturity FAQs
No. You can redeem the bonds only after five years of issuance. However, you can only exercise premature redemption on the interest payment dates as defined by the Reserve Bank of India (RBI).
The application can be filed at the institution where you bought your SGB, like your bank, post office, SHCIL, RBI Retail Direct, or your Depository Participant if it is in demat format.
The Reserve Bank of India uses the formula to calculate the redemption price using the arithmetic mean of the closing price of 999 purity gold in the previous three days.
Yes, if the SGB that you hold is listed and in the demat format, then you can consider selling the same.
Ready to Invest?
Visit GoldenPi to explore current bond options. Compare yields, ratings, and tenures in one place and invest online with as little as ₹10,000.
Disclaimer:
Fixed returns do not constitute guaranteed or assured returns. Investments in corporate debt securities and municipal debt securities/securitized debt instruments are subject to credit risks, market risks, and default risks, including delay and/or default in payment. Read all the offer-related documents carefully. This blog/article should not be construed as financial advice or as an offer or recommendation to buy or sell any security or any products/services of/on GoldenPi or any product/services of its third-party client(s). For a detailed calculation of YTM, visit our website. T&C’s Apply.
