Sovereign Gold Bond 2016-17 Series IV: Final Redemption Price Set at ₹8,624 – Check Details!

The final redemption of the Sovereign Gold Bond (SGB) 2016-17 Series IV is scheduled for March 17, 2025, with the Reserve Bank of India (RBI) setting the redemption price at ₹8,624 per unit. This price is determined based on the simple average of closing gold prices from March 10-13, 2025, as published by the India Bullion and Jewellers Association Ltd (IBJA), since March 14, 2025, was a holiday. Sovereign Gold Bonds are government-backed securities linked to gold prices, providing an alternative to holding physical gold while offering cash redemption upon maturity.

Issued by the RBI on behalf of the Government of India, these bonds can be purchased through scheduled commercial banks, the Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges such as NSE and BSE. However, Small Finance Banks and Payment Banks are not authorized to sell SGBs. The scheme is open to resident individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions. SGBs present a secure investment option, allowing investors to benefit from gold price appreciation while avoiding the risks associated with physical gold storage.

Sovereign Gold Bond 2016-17 Series IV: Final Redemption Price Set at ₹8,624 – Check Details!

The Reserve Bank of India (RBI) has finalized the redemption value for Sovereign Gold Bonds (SGBs) under the 2016-17 Series IV, scheduled to mature on March 17, 2025, at ₹8,624 per unit. This valuation reflects the simple average of gold prices recorded over three business days—March 10 to March 13, 2025—since March 14, 2025, was a public holiday. The calculation follows the RBI’s policy of determining redemption prices using closing rates for gold of 999 purity, as published by the India Bullion and Jewellers Association Limited (IBJA).

Redemption Process and Pricing Mechanism

Typically, the redemption price for SGBs is calculated using the average closing gold prices from the preceding Monday to Friday. However, in this case, the exclusion of March 14 (a holiday) shortened the calculation window to three days. The RBI emphasized that this adjustment aligns with the SGB scheme’s guidelines, ensuring transparency and consistency. Investors will receive cash equivalent to the computed redemption price upon maturity, eliminating the need for physical gold handling.

Overview of the Sovereign Gold Bond Scheme

Introduced in 2015, Sovereign Gold Bonds (SGBs) are financial instruments designed to reduce reliance on physical gold by offering a secure, paper-based alternative. Issued by the RBI on behalf of the Government of India, these bonds allow investors to benefit from gold price movements without the risks associated with storage, theft, or purity concerns. Each bond unit represents one gram of gold, and investors subscribe at prevailing market rates. The bonds mature in eight years, with an early exit option after five years. Upon maturity, they are redeemed in cash based on the contemporary gold price.

Sales Channels and Accessibility

SGBs are distributed through multiple avenues to ensure broad accessibility:

1. Scheduled Commercial Banks: Major banks (excluding Small Finance Banks and Payment Banks) facilitate subscriptions during issuance periods.
2. Stock Exchanges: Investors can trade SGBs on platforms like the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in the secondary market.
3. Post Offices and Institutions: Designated post offices and entities such as the Stock Holding Corporation of India Limited (SHCIL) also participate in distribution.

This multi-channel approach ensures that both online and offline investors can easily access the scheme.

Eligibility and Investment Scope

The SGB scheme is open to resident individuals, Hindu Undivided Families (HUFs), and institutional entities such as trusts, universities, and charitable organizations. Non-resident Indians (NRIs) and foreign entities are not eligible. Investors can purchase bonds in denominations as low as one gram, with an annual cap of 4 kg for individuals and HUFs, and 20 kg for trusts and institutions.

Benefits of Investing in SGBs

1. Interest Earnings: Unlike physical gold, SGBs offer a fixed annual interest rate of 2.5% on the initial investment, paid semi-annually.
2. Tax Efficiency: Capital gains from redemption at maturity are exempt from capital gains tax, though early exits may be subject to taxation.
3. Security: Backed by a sovereign guarantee, SGBs eliminate risks such as theft, counterfeit gold, or purity issues.
4. Liquidity: Bonds listed on stock exchanges can be traded, providing investors with exit options before maturity.

Market Context and Gold Price Trends

The redemption price of ₹8,624 reflects gold market dynamics during the computation period. Factors such as global economic uncertainty, inflation trends, and currency fluctuations influence gold prices, making SGBs an effective hedge against market volatility. Historically, rising inflation has driven higher demand for gold as a safe-haven asset, potentially boosting returns for SGB investors.

Investor Implications

For subscribers of the 2016-17 Series IV bonds, the redemption price of ₹8,624 marks the culmination of an eight-year investment period. Comparing this to the issue price of ₹3,119 per gram in 2016–17 highlights significant capital appreciation alongside semi-annual interest payouts. This underscores the dual advantage of SGBs: exposure to gold’s price appreciation and steady interest income.

Conclusion

The RBI’s announcement reaffirms the SGB scheme’s role in promoting financial savings over physical gold. By offering a secure, tax-efficient, and accessible investment avenue, SGBs align with India’s broader economic objectives of reducing gold imports and strengthening fiscal stability. Investors should review their portfolios ahead of the March 2025 maturity date and consider reinvesting in future SGB issuances to maintain exposure to gold’s wealth-preservation benefits.