Summary of this article
RBI announces early redemption for SGB 2020-21 Series-VII.
Investors can gain 153 per cent over purchase.
Redemption date fixed on October 20, 2025.
The Reserve Bank of India (RBI) has announced the early redemption price and date for Sovereign Gold Bond (SGB) 2020-21 Series-VII. All those investors who had bought this series of bonds, launched on October 20, 2020, can now redeem their holdings early on October 20, 2025.
Investors can make a whopping gain over their initial investment with a return of more than 153 per cent.
Premature Redemption Facility For Investors
SGBs have an eight-year fixed tenure. RBI regulations permit investors to withdraw early after five years from the issue date. This facility enables investors to fulfill liquidity requirements without requiring them to hold the bonds till maturity. The 2020-21 Series-VII was available for subscription between October 12 and October 16, 2020, and was issued on October 20, 2020.
Investors who bought this series for Rs 5,051 per gram can now redeem their bonds at Rs 12,792 per unit on October 20, 2025. The redemption price is determined by taking the simple average of the closing prices of gold of 999 fineness published by the India Bullion and Jewellers Association for three working days preceding the redemption date. Here, the prices for October 15, 16, and 17, 2025 have been taken into account for this series.
How Returns Are Calculated
The total return on this series of SGBs is Rs 7,741 per gram, or a return of 153.26 per cent over the original issue price. This does not take into account the fixed annual interest paid (half-yearly) on these bonds.
SGBs offer two significant benefits to investors. One, they benefit from appreciation in gold prices over the years. Two, they receive a fixed rate of interest, which supplements the overall returns.
Investors can also opt to keep these bonds till maturity to achieve long-term benefits, which are tax-free. But the facility of premature redemption guarantees that even those who are in need of liquidity prior to the eighth year get to get their money. RBI has specifically made it clear as to when premature redemption can be asked for and with what conditions.
Benefits of Investing in SGBs
SGBs offer a number of benefits compared to physical gold. Investors don't have to bother about storage costs, making charges, or purity issues associated with physical gold. The bonds are kept either in RBI books or dematerialised form, avoiding loss, theft, or damage. Moreover, investors can be rest assured of the current market price of gold at the time redemption and the interest earnings. All these aspects make SGBs a safer and more convenient option compared to jewellery or coins.
SGBs also prevent complications associated with selling gold in the market, as RBI fixes the redemption price based on clear pricing. The interest charged half-yearly provides a constant income stream while the investors await the value of the bond to appreciate. Such characteristics make SGBs the investment preference for long-term investors looking to gain exposure to gold without actually holding the physical metal.
What Investors Need To Do For Premature Redemption
Investors who wish to redeem their SGBs before the due date must first determine the series and tranche that they have. They can do this by checking the issue date of the bonds. They need to also send in their request for redemption ahead of the stipulated deadline set by the RBI. Premature redemption will be done on October 20, 2025, for the 2020-21 Series-VII.
It is to be noted that premature redemption is permissible only on the date of payment of interest after completion of five years. Investors need to examine carefully the schedule of redemption and make sure that all formalties are done on time. The RBI will credit the amount of redemption to the investor's linked bank account once it is submitted.
The SGB 2020-21 Series-VII provides investors with an option to earn a high return on investment with its premature redemption price at Rs 12,792 per gram, equivalent to a 153.26 per cent increase from the issue price. The dual benefit of appreciation in gold prices and fixed interest income makes SGBs a secure and rewarding investment. Investors intending to redeem bonds are advised to notice the date of October 20, 2025 and approach RBI as per procedures for a smooth process.
