Important Queries for buying SGB bonds from Market

Hello Team, I have few questions regarding buying SGB Bonds directly from the Market. Please answer all my below queries :

When I buy SBG (e.g 2016 issue) from Market, how the redemption of the same can be done after it gets matured?

As the 2016 (example here) issue will be on the behalf of someone else’s name, how the ownership of that bond gets transferred? What are documents/proofs one will be receiving on buying SGB bonds from the market?

How the bi-annual interest gets calculated and deposited?

As the above questions are based on buying SGB bonds, also suggest essential information that one must be aware of while selling SBG Bonds in the market?


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As per the FAQs on RBI website -

22. How will I get the redemption amount?

Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

23. What are the procedures involved during redemption?

  • The investor will be advised one month before maturity regarding the ensuing maturity of the bond.
  • On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.
  • In case there are changes in any details, such as, account number, email ids, then the investor must intimate the bank/SHCIL/PO promptly.

24. Can I encash the bond anytime I want? Is premature redemption allowed?

Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.

25. What do I have to do if I want to exit my investment?

In case of premature redemption, investors can approach the concerned bank/SHCIL offices/Post Office/agent thirty days before the coupon payment date. Request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.

As per the FAQs on RBI website -

34. Can I trade these bonds?

The bonds are tradable from a date to be notified by RBI. (It may be noted that only bonds held in de-mat form with depositories can be traded in stock exchanges) The bonds can also be sold and transferred as per provisions of Government Securities Act, 2006. Partial transfer of bonds is also possible.

SGBs will be held in your Demat account like your other stock holdings. You can confirm the same by going through the holdings statement provided by Zerodha and CDSL. Certificate of Holding will not be issued for SGBs bought via the exchanges (aka secondary market) -

As per the FAQs on RBI website -

14. What is the rate of interest and how will the interest be paid?

The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

Initial investment means the Issue Price (List of Issue price for various tranches of SGBs is available on the RBI website)