The Reserve Bank has announced the final redemption price for Sovereign Gold Bond (SGB) 2017-18 Series VII, maturing today, i.e. November 13. The final redemption price has been fixed at Rs 12,350 per gram, according to an official notification.
Sovereign Gold Bond (SGB) 2017-18 Series VII was issued on November 13, 2017. The issue price was Rs 2,934 per gram after factoring in an online subscription discount of Rs 50 per gram.
Sovereign gold bonds have a full maturity period of 8 years, with an option to redeem prematurely after completing 5 years.
Pricing basis and maturity conditions
The RBI’s announcement for this tranche specified only the maturity date and the price.
It did not include investor instructions or process details. Those are governed entirely by the Ministry of Finance notification issued on October 6, 2017. The notification states that the bond “shall be repayable on the expiration of eight years from the date of issue”, setting the maturity of Series VII on November 13, 2025.
The notification also states that early redemption, if opted for, can take place only after the fifth year and only on interest-payment dates.
The redemption value has been computed using the simple average of 999-purity gold prices published by the India Bullion and Jewellers Association (IBJA) for November 10, 11 and 12.
Issue structure and digital discount
Series VII was part of the weekly issuance calendar run between October and December 2017. For this particular subscription window, the nominal value of Rs 3,034 per gram was fixed using the three-day IBJA price average that preceded it. The Rs 50 per gram digital-payment discount, applicable to all online applicants, lowered the entry cost to Rs 2,984.
That reduced purchase price is central to the calculation of today’s return. The digital concession has remained a consistent feature of the SGB programme and continues to apply to new issuances.
Interest payments
The SGB carries a fixed annual interest rate of 2.5% on the nominal issue value. The rate is paid in two instalments each year. The notification stated that the final interest is paid together with the principal at maturity. Interest remains taxable in the year of receipt. The maturity price announced today does not include interest; it is strictly the redemption value calculated under the IBJA formula.
