Sovereign Gold Bonds: RBI Announces Pre-Mature Redemption For These SGBs, Investors Earn Up To 147% Return

The Reserve Bank of India (RBI) has announced that investors in the Sovereign Gold Bond (SGB) 2019-20 Series-IX and 2020-21 Series-V will be eligible for pre-mature redemption on August 11, 2025, at a fixed redemption price of Rs 10,070 per gram.

At the redemption price, investors in the 2019-20 Series-IX will make Rs 6,000 more per gram than the issue price, which means a 147 per cent return. For the 2020-21 Series-V, the gain is Rs 4,736 per gram, or an 89 per cent return. These figures do not include the 2.5 per cent yearly interest that is paid twice a year.

What are SGBs

SGBs are government-backed investment bonds represented in grams of gold and issued by the RBI on behalf of the Government of India. According to RBI, these bonds are “substitutes for holding physical gold”.

SGBs have an eight-year tenure, however, investors have the option for early redemption after the fifth year from the date of issue, only on interest payment dates.

How Is SGB Redemption Price Calculated

According to an RBI press release dated August 8, the price has been calculated on the basis of the simple average of closing gold prices (999 purity) published by the India Bullion and Jewellers Association Ltd (IBJA) for the three business days preceding the redemption date – August 6, 7 and 8, 2025.

SGB 2019-20 Series-IX

• Issue Price: Rs 4,070

• Redemption Price: Rs 10,070

• Gain: Rs 6,000

• Return: 147 per cent

SGB 2020-21 Series-V

• Issue Price: Rs 5,334

• Redemption Price: Rs 10,070

• Gain: Rs 4,736

• Return: 89 per cent

On top of the capital gains, both tranches also offered investors a fixed interest of 2.5 per cent per year on the original investment amount. This interest was paid out every six months directly to the investor’s bank account.

What It Means for Investors

The pre-mature redemption option allows investors to exit without relying on the secondary market, which can sometimes be illiquid. For those who purchased these specific SGB tranches, the gains realised at redemption are exempt from tax.

How to Redeem SGBs

• Ensure that your SGBs are eligible for pre-mature redemption.

• File a written request with the issuing institution.

• Fill redemption form, provide necessary documents such as PAN, bond certificate, and bank account details.

• Once processed, the redemption amount will be credited directly to your registered bank account.