Sovereign Gold Bond Series II Gives 357% Return on Redemption

Mumbai: Holders of the Sovereign Gold Bond 2018-19 Series-II stand to earn a return of about 357 per cent, excluding interest, after the Reserve Bank of India (RBI) fixed the final redemption price at Rs 14,425 per gram.

According to the RBI, the bond will mature on October 23, 2026. Gold bonds of this type are redeemed once eight years have passed since the date of issue.

The bond was first offered in October 2018 at a price of approximately Rs 3,146 per gram. The gap between that issue price and the final redemption value translates into a gain of nearly 357 per cent for investors, excluding the interest they have received over the years.

Bondholders also get an annual interest payment of 2.5 per cent. The Government of India issues these bonds through the RBI, and the interest is paid in addition to the redemption amount.

The central bank explained that the redemption price is based on the simple average of 999 purity gold closing prices for the last three business days before redemption. These prices are published by the India Bullion and Jewellers Association Limited (IBJA).

For the final redemption due on October 23, 2026, the relevant days are October 19, 21 and 22, 2026. The average of gold prices on those days has been set at Rs 14,425 per unit.

The Government of India, acting through the RBI, issued the Series-II bonds on October 23, 2018. Investors could subscribe between October 15 and 19, 2018. Digital and online applicants were given a discount of Rs 50 per gram.