RBI Sets Final Redemption Rate for SGB 2016-17 Series IV at Rs 8,624/unit
Gold prices have reached new highs, surpassing the critical $3,000 per ounce mark for the first time in early trading on Friday in global markets. In response to this surge, the Reserve Bank of India (RBI) has announced the final redemption price for the Sovereign Gold Bonds (SGBs) maturing on March 17. The price for the 2016-17 Series IV, originally issued on March 17, 2017, has been set at Rs 8,624 per gram
Redemption Price Calculation
According to an RBI statement, the redemption price is determined based on the simple average of the closing gold price (999 purity) over the preceding Monday-to-Friday period, as published by the India Bullion and Jewellers Association.
Unclear Volume of Gold Buyback
The exact amount of gold that will be repurchased remains unspecified. Since the introduction of the SGB scheme in November 2015 under the Gold Monetisation Scheme, a total of 146.96 tonnes of gold have been issued across 67 tranches, raising Rs 72,274 crore. Starting July 2024, the RBI initiated premature redemption for bonds issued between 2017 and 2020
SGB Purchases and Gold Price Trends
In FY24 alone, investors purchased SGBs worth Rs 27,031 crore, equivalent to 44.34 tonnes of gold, prior to the budget announcement in July. The budget included provisions for premature redemption and a significant reduction in import duties on gold—from 15% to 6%—as global prices continued to rise.
Gold prices increased by more than 22% in 2024 and have already risen over 14% in 2025. Spot gold is currently trading above $3,000 per ounce, with the latest price recorded at $3,010 per ounce on the Chicago Mercantile Exchange as of 18:00 IST.
Redemption Timeline for SGBs
The 2016-17 Series IV SGBs were issued on March 17, 2017, under the government’s sovereign gold bond scheme, with an eight-year maturity period. Consequently, the final redemption date is set for March 17, 2025.
Several other tranches from 2016 have already matured:
- Series I (Issued on August 5, 2016, at Rs 3,119 per unit) was redeemed in August 2024 at Rs 6,938 per unit.
- Series II (Issued on September 30, 2016, at Rs 3,150 per unit) was redeemed on September 30, 2024, at Rs 7,517 per unit.
- Series III (Issued on November 17, 2016, at Rs 3,007 per unit) was redeemed on November 16, 2024, at Rs 7,788 per unit.
Two SGB tranches from 2016 have already reached maturity in 2024 and have been successfully redeemed.
Government’s Redemption Strategy and Future Outlook
Since July 2024, the government has redeemed six tranches of SGBs, with 61 remaining outstanding. The final redemption for the entire series is scheduled for February 2032.
The budget for July 2024 projected that the government’s liabilities for SGBs would reach Rs 85,000 crore by the end of the fiscal year—almost nine times the level recorded in FY20. The reduction in gold import duties led to a 6% decline in domestic gold prices, significantly benefiting the government’s redemption payouts. Despite this, investors in the first redemption phase received a premium of 122% on their investments.
Recent Redemptions and Buybacks
The most recent premature redemption took place on February 11, 2025, at Rs 8,499 per unit. The first redemption under this scheme was executed on August 10, 2024, at Rs 6,938 per unit.
In the first-ever SGB redemption on August 5, 2024 (pertaining to the August 10, 2016 issuance), the RBI repurchased 3.75 tonnes of gold. The second redemption on September 23, 2024, involved the buyback of 3.6 tonnes, while the third tranche saw the RBI repurchase 8 tonnes.
SGB Interest and Tax Implications
Sovereign Gold Bonds offer an annual interest rate of 2.5%, payable semi-annually. While the interest earnings are taxable, investors benefit from capital gains tax exemption on redemption.
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