Can I get physical gold in exchange for SGBs?

I have 20 units of sovereign gold bonds 2016-17. It will mature on November 17, 2024. Can I get 20 grams of gold in addition to cash in exchange for this? - Anonymous

No, investors cannot claim physical gold at the time when their sovereign gold bonds (SGBs) mature.

Sovereign gold bonds are an alternative to holding physical gold, where investors pay the issue price in monetary terms and redeem the bonds on maturity in monetary terms as well. SGBs can also be redeemed prematurely after a lock-in period of five years from the bond issue date, on the dates the interest is payable.

The redemption price for SGBs upon maturity is determined by the average closing price of 24-carat gold for the previous three business days preceding the maturity date, as published by India Bullion and Jewelers Association Limited. Similarly for premature redemptions, it is three business days preceding the redemption date.

The redemption proceeds are then credited to the bank account provided by the investor at the time of purchasing the bond.

For premature redemptions, investors have a window of 30 days before the coupon payment date to submit a request to the relevant bank/SHCIL offices/post office/agent. It's worth noting that capital gains will be taxable upon premature redemption or encashment of the SGBs.

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