If you had invested in Sovereign Gold Bond (SGB) 2019-20 Series-II in the year 2019, then there is good news for you. The Reserve Bank of India (RBI) has given the facility of premature redemption (premature withdrawal) to the investors of this series from July 16, 2026. The special thing is that the investment of ₹ 1 lakh made in this bond has now increased to about ₹ 4.18 lakh. Apart from this, investors have also got the benefit of interest at the rate of 2.5% every year.
Premature withdrawal facility is available after five years
The total tenure of Sovereign Gold Bond is 8 years, but investors get the option of premature redemption from the fifth year onwards on the date of interest payment. SGB 2019-20 Series-II was released on 16 July 2019. In such a situation, now investors of this series can redeem their investments as per the rules set by RBI.
How is the redemption price determined?
As per RBI rules, the price of premature redemption is decided on the basis of the average closing price of gold of 999 purity for the last three working days. This price is determined on the basis of rates issued by India Bullion and Jewelers Association (IBJA). Therefore, the final amount received by investors will depend on the market price of gold.
What are the benefits of investing in SGB?
Sovereign Gold Bond is considered a better option to buy physical gold. In this, investors not only get the benefit of increase in the price of gold, they also get 2.5% interest annually on the investment amount, which is deposited directly in the bank account.
Apart from this, one also gets the benefit of tax exemption on capital gains received by maintaining the investment till maturity. This is the reason why SGB has been very popular among long-term investors.
Withdraw now or wait till maturity?
Financial experts say that the decision of premature withdrawal depends on the need and financial goals of the investor. If the money is not needed immediately and the investor wants to take full advantage of the tax benefits, then maintaining the investment till maturity may be a better option. Whereas, those who need money or want to book profits can opt for premature redemption.
Experts advise that before taking the decision of withdrawal, you must assess the current price of gold, future prospects and your financial goals, so that the right decision can be taken at the right time.
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