The Reserve Bank of India (RBI) has announced the premature redemption price for (SGB 2020-21 Series VII - issue date October 20, 2020). According to a statement from the RBI, gold bond investors will have the option to redeem this SGB tranche prematurely on October 19, 2026 (October 20, 2026, being a holiday).
The premature redemption of the SGB series is permitted after the fifth year from the date of the issue of such gold bonds on the date on which interest is payable, as per the statement from the RBI.
Upcoming tranches in October 2026
The premature redemption date for SGB 2019-20 Series VI is October 30, 2026. For SGB 2020-21 Series I, issued on April 28, 2020, the premature redemption date is October 28, 2026.
How is the SGB redemption price calculated?
The gold bond series’ redemption value is calculated based on the simple average closing price of the gold of 999 purity published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days, the RBI statement further said.
What is the premature redemption price for SGB 2020-21 Series VII?
The premature redemption price due on October 19, 2026, has been fixed at Rs 14,614 per unit of the SGB, based on the simple average of the closing price of gold for the last three business days, i.e., October 14, October 15 and October 16, 2026.
The SGB 2020-21 Series VII was issued at Rs 5,001 per gram for online purchases. It will yield an absolute simple return of around 192% on the date of the premature redemption.
The absolute return is Rs 14,614 − Rs 5,001 = Rs ₹9,613. (without factoring in the interest). In percentage terms, it is ₹9,613 ÷ ₹5,001 × 100 = 192.21%.
A 192% return means that an investment of Rs 1 lakh in this SGB has grown to approximately Rs 2.92 lakh, excluding the interest earned during the holding period.
Important frequently asked questions (FAQs) about SGBs as per the RBI website-
What is a Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price, and the bonds are redeemed and paid back to investors on maturity.The gold bond is issued by the RBI on behalf of the government.
What is the rate of interest SGB investors get on their investment and how is the interest paid?
The bonds bear interest at the rate of 2.50% (fixed rate) per annum on the amount of the initial investment. However, SGBs issued in the Financial Year 2015-16 offered an interest rate of 2.75%.