By Sneha Kulkarni

Copyright indiatimes

The Reserve Bank of India (RBI) has announced the premature redemption price for the Sovereign Gold Bond (SGB) 2019-20 Series-IV-Issue date September 17, 2019. According to a statement from the Central Bank, investors will have the option to redeem these SGBs prematurely on September 17, 2025. SGBs come with a fixed tenure of eight years, but investors are given the flexibility to exit early. As per RBI guidelines, SGB premature redemption is allowed only after the completion of the fifth year from the date of issue of such bonds.Income Tax GuideIncome Tax Slabs FY 2025-26Income Tax Calculator 2025New Income Tax Bill 2025This tranche of 2019-20 Series-IV-Issue was open for subscription from September 9, 2019 to September 13, 2019. The bonds were issued on September 17, 2019.Premature redemption date for SGB 2019-20 Series- IVThe RBI has said in a statement that in terms of GOI notification F.No. 4(7)-B(W&M)/2019 dated May 30, 2019 (SGB 2019-20 Series-IV-Issue date September 17, 2019) on Sovereign Gold Bond Scheme, the premature redemption of the Sovereign Gold Bond series may be permitted after the fifth year from the date of issue of such Gold Bonds on the date on which interest is payable. Accordingly, the next due date of the premature redemption of this SGB tranche is September 17, 2025.156% return on SGBs: RBI announces premature redemption price and date for this SGB series; check detailsWhat is the redemption price of SGB 2019-20 Series- IV?As per the RBI statement, the redemption price for the premature redemption of SGB 2019-20 Series-IV due on September 17, 2025, will be Rs 11,003 per unit of SGB based on the simple average of the closing gold price for the three business days i.e., September 12, September 15, and September 16, 2025. The SGB 2019-20 Series-IV was issued at Rs 3,890 per gram. It will yield an absolute simple return of nearly 183% on the date of the premature redemption.The absolute return comes to Rs 11,003 -Rs 3,890 = Rs 7,113 (without factoring in the interest). In percentage terms, it is 7113 ÷ 3890× 100 = 183%. SGB interest paymentSGBs offer an interest rate of 2.50% (fixed rate) per annum on the initial investment amount. The interest amount is credited semi-annually to the bank account of the SGB investor. The last interest instalment is payable on maturity along with the principal.What are the benefits of investing in SGBs?As per the RBI, SGBs offer a superior alternative to holding gold in physical form. The risks and costs of their storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in the demat form eliminating the risk of loss of scrip, etc.What investors need to do for premature redemption?Investors holding SGBs should review the redemption schedule carefully. Some of the key actions include:a) Identify the tranche to which your bonds belong by checking the issue date.b) Ensure that your request for premature redemption is submitted by the deadline mentioned in the schedule.