RBI Fixes SGB 2021-22 Series VII Redemption Price at ₹14,167

The Reserve Bank of India (RBI) has fixed the premature redemption price of Sovereign Gold Bonds (SGB) 2021-22 Series VII at ₹14,167 per gram. Investors holding these bonds become eligible for premature redemption on 2 November 2026, following the completion of five years from the date of issuance on 2 November 2021. The RBI’s press release, dated 30 October, confirms that the redemption price is calculated using the simple average of the closing prices of 999-purity gold over the three preceding business days: October 28, October 29, and October 30, 2026.

For ordinary savers, this valuation translates into substantial capital gains. According to the Ministry of Finance, the original issue price was ₹4,765 per gram. Offline subscribers will realize a capital gain of ₹9,402 per gram, equivalent to a 197.31% return. Online subscribers, who received a discount of ₹50 per gram bringing their effective purchase price to ₹4,715, will see a gain of ₹9,452 per gram, resulting in a 200.41% return. This pricing mechanism allows investors to exit before the final maturity date while still capturing the appreciation in gold prices.

In addition to capital gains, SGBs carry a fixed interest rate of 2.5% per annum on the nominal value of ₹4,765 per gram. For an investor holding 10 grams, purchased at ₹47,650, the annual interest is ₹1,191.25. Over five full years, the estimated interest income amounts to ₹5,956.25, credited semi-annually. The final interest payment is made along with the redemption proceeds.

These figures are for informational purposes and exclude applicable taxes. Actual interest received depends on the payment schedule and the investor's specific holding period. The redemption price reflects the current market value of gold, providing a clear benchmark for those looking to liquidate their holdings after the mandatory five-year lock-in period.

What to watch: The tax implications on the realized capital gains for individual investors.

Editor's note: The article effectively synthesizes all provided details from the source, including specific redemption dates, pricing, and interest calculations.