147% return on Sovereign Gold Bonds: RBI announces premature redemption price of these SGBs
How is SGB redemption price calculated?
What is the redemption price of SGB 2019-20 Series-IX and SGB 2020-21 Series-V ?
SGB 2019-20 Series-IX
SGB 2020-21 Series-V
The Reserve Bank of India ( RBI ) has announced the premature redemption price for Sovereign Gold Bonds SGB 2019-20 Series-IX and SGB 2020-21 Series-V. The option to prematurely redeem these SGBs will be available on August 11, 2025, The tenure of these gold bonds is eight years and premature redemption of SGBs is permitted only after the fifth year from the date of issue.The last tranche of SGBs - SGB 2023-24 Series IV was issued in February 2024.The Sovereign Gold Bond (SGB) Scheme, managed by the RBI on behalf of the Government of India, offers a secure, paper/demat alternative to holding physical gold, eliminating storage and purity concerns while paying 2.5% annual interest. Pre-mature redemption of SGBs is allowed, after 5 years from date of issue, on interest payout dates. The bonds are tradable, transferable and can be used as loan collateral.Also read: Has RBI directed banks to stop disbursing Rs 500 notes from ATMs by September 30, 2025? Here is what government said According to an RBI press release dated August 8, 2025, 'The redemption price of SGB shall be based on the simple average of closing gold price of 999 purity of previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA)The redemption price for premature redemption due on August 11, , 2025, shall be Rs 10,070 per unit of SGB based on the simple average of closing gold price for the three business days i.e., August 06, August 07, and August 08, 2025, according to the press release.The SGB 2019-20 Series-IX, issued at Rs 4070 per gram in September 2019, will yield an absolute simple return of nearly 147% on pre-mature redemption at the above mentioned price.The absolute return comes to Rs 10,070 -4070 = Rs 6000 (without factoring in the interest). In percentage terms, it comes to 147.4%The SGB 2020-21 Series-V, issued at Rs 5,334 per gram in August 2020, will yield an absolute return of nearly 89% if redeemed prematurely on the date mentioned above.The absolute return has been calculated as: Rs 10,070-5,334 = Rs 4736 (without factoring in the interest). In percentage terms, it comes to 88.8%Note that the above absolute return calculations exclude the annual 2.5% interest which is over and above the capital gain earned.The bonds bear interest at the rate of 2.50% (fixed rate) per annum on the amount of initial investment. Interest is credited semi-annually to the bank account of the investor and the last interest instalment is payable on maturity along with the principal.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.
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