Summary of this article
SGB Series VIII premature redemption begins May 18.
RBI sets early redemption price at Rs 16,012.
Online buyers will realize massive 212 per cent absolute returns.
Investments in gold have given handsome returns in 2026. Sovereign Gold Bond (SGB) holders have benefited significantly from the price rise in gold. Amid the rise in gold prices, SGB investors who hold SGB 2020-21 Series-VIII are set to get a chance to prematurely redeem their holdings.
SGB 2020-21 Series-VIII Premature Redemption Date
The date for the premature redemption of SGB 2020-21 Series-VIII is May 18, 2026, according to a notification issued by the Reserve Bank of India. Investors can begin to prematurely redeem their investments from the date. According to RBI norms, investors are allowed to prematurely redeem their holdings after the fifth year from the date of the issue of gold bonds on a date on which interest is payable.
Premature redemption price for SGB 2020-21 Series-VIII
The SGB 2020-21 Series VIII can be prematurely redeemed at a price of Rs 16,012 per unit. The issue price for the tranche was Rs 5,127 per gram for investors who purchased the bond online and Rs 5,177 for offline investors. Based on the redemption price, investors are set to get an absolute return of 212.30 per cent on May 18. Thus, investors are set to make gains of Rs 10,885 per unit. For example, if an investor had invested Rs 1 lakh in the SGB 2020-21 Series-VIII, he or she would make a profit of Rs 2,12,000, and their holding would be valued at Rs 3,12,000.
How is the Premature Redemption Price Calculated?
The premature redemption price for SGBs is determined by computing the simple average of the closing prices of 999 purity gold published by the India Bullion and Jewellers Association (IBJA). The price is based on the simple average of the closing price for the three working days before the redemption date.
For SGB 2020-21 Series-VIII, the price was calculated on the basis of the simple average of the closing price on May 13, May 14 and May 15.
Apart from the returns earned upon redemption or premature redemption. SGB investors also receive interest at the rate of 2.50 per cent (fixed rate) per annum. However, the interest is credited semi-annually to the bank account of an investor.
Minimum and Maximum Investable Amounts For SGB
Sovereign gold bonds are issued in denominations of one gram of gold. The RBI has fixed the minimum investment in the bonds at one gram of gold; on the other hand, the maximum investable amount is equivalent to 4 kg of gold for individuals and Hindu Undivided Family (HUF). On the other hand, entities like Trusts can invest up to 20 kg.
