Summary of this article
SGB 2020-21 Series XI is available for premature redemption on February 9
The gold bond is giving over 200 per cent return to investors
The Reserve Bank of India (RBI) has said that the premature redemption window for the sovereign gold bond (SGB) 2020-21 Series XI will open on February 9, Monday. The date marks five years since the gold bond was issued by the government. The tenure of every SGB series is eight years.
The SGB 2020-21 Series XI, issued on February 9, 2021, was issued at a price of Rs. 4912 per gram for offline investors. Investors who applied for the bond online received an additional discount of Rs. 50 per gram. For online investors, the issue price of the gold bond was at Rs. 4,862 per gram.
How Much Will Investors Get?
Investors are set to get a return of nearly 216 per cent on their investment with the premature redemption of the SGB 2020-21 Series XI. The gold bond was issued at a price of Rs. 4,862 and at redemption on February 9, the price of the bond will be at Rs. 15,374, giving investors more than three-fold return on their investment, without factoring the interest.
Apart from this, SGBs also offer a 2.5 per cent interest annually on the initial investment amount. This interest is paid bi-annually to the bank account of the investor. The last instalment of the interest will come to investors on the date on maturity of the bond along with the principal amount. The SGB 2020-21 Series XI interest is also payable on February 9, on the date of premature redemption.
The premature redemption of the SGB 2020-21 Series XI which opens on February 9 will be available at a price of Rs. 15,374 per unit of the bond. The price of redemption is based on a simple average of gold’s closing price for the previous three business days according to Indian Bullion Jewellers Association (IBJA). Accordingly, the closing price of gold on February 4, 5, and 6 has been taken into account.
The SGB scheme is managed by the RBI on behalf of the government. It offers investors a secure paper alternative to holding gold physically. This form of investment also eliminates the issue of logistics of storing gold and any concerns over purity while also paying investors an annual interest. For every SGB, premature redemption of the bonds is allowed five years after the date of issuance of the bond, on the date of interest payout.
At the presentation of Union Budget 2026, Union Finance Minister Nirmala Sitharaman proposed changes in taxation of sovereign gold bonds. According to the changes, tax exemption will now be available only to investors who have bought gold bonds from the RBI at the time of issue of the bond and held them till maturity.
