What is the story about?
Investors in the Sovereign Gold Bond (SGB) 2020-21 Series IX are set to book a price gain of about 168% as the government opens the window for premature redemption on Monday, January 5, five years after the bond’s issuance.
The redemption price for the tranche has been fixed at ₹13,381 per unit, according to the Reserve Bank of India (RBI). The bond was issued at ₹5,000 per gram during the subscription period in December 2020, implying a price appreciation of ₹8,381 per unit, or 167.6%, over five years.
This gain is over and above the 2.5% annual interest, paid semi-annually, that SGB investors earn during the holding period.
In terms of the Sovereign Gold Bond Scheme guidelines, premature redemption is permitted after the completion of five years from the date of issue, provided the exit coincides with an interest payment date. Accordingly, the SGB 2020-21 Series IX, issued on January 5, 2021, becomes eligible for early redemption on Monday (January 5, 2026).
The redemption price is calculated as the simple average of the closing price of gold of 999 purity for the previous three business days, as published by the India Bullion and Jewellers Association (IBJA). For the January 5, 2026 redemption, the price reflects gold rates recorded on December 31, 2025, January 1, 2026, and January 2, 2026.
At the time of issuance, the RBI had announced an issue price of ₹5,000 per gram through a press release dated December 24, 2020. The Government of India, in consultation with the central bank, also offered a ₹50 per gram discount to investors applying online and paying through digital modes, which further enhanced effective returns for eligible subscribers.
The sharp increase in redemption value mirrors the strong rally in domestic gold prices over the past five years. For individual investors, gains arising from redemption of SGBs remain exempt from capital gains tax, under prevailing tax provisions.
Sovereign Gold Bonds have a total maturity of eight years, with the option of premature redemption from the fifth year onwards. Investors who do not opt for early exit can continue to hold the bonds until maturity in 2029, with final returns linked to gold prices prevailing at that time.
The redemption price for the tranche has been fixed at ₹13,381 per unit, according to the Reserve Bank of India (RBI). The bond was issued at ₹5,000 per gram during the subscription period in December 2020, implying a price appreciation of ₹8,381 per unit, or 167.6%, over five years.
This gain is over and above the 2.5% annual interest, paid semi-annually, that SGB investors earn during the holding period.
In terms of the Sovereign Gold Bond Scheme guidelines, premature redemption is permitted after the completion of five years from the date of issue, provided the exit coincides with an interest payment date. Accordingly, the SGB 2020-21 Series IX, issued on January 5, 2021, becomes eligible for early redemption on Monday (January 5, 2026).
The redemption price is calculated as the simple average of the closing price of gold of 999 purity for the previous three business days, as published by the India Bullion and Jewellers Association (IBJA). For the January 5, 2026 redemption, the price reflects gold rates recorded on December 31, 2025, January 1, 2026, and January 2, 2026.
At the time of issuance, the RBI had announced an issue price of ₹5,000 per gram through a press release dated December 24, 2020. The Government of India, in consultation with the central bank, also offered a ₹50 per gram discount to investors applying online and paying through digital modes, which further enhanced effective returns for eligible subscribers.
The sharp increase in redemption value mirrors the strong rally in domestic gold prices over the past five years. For individual investors, gains arising from redemption of SGBs remain exempt from capital gains tax, under prevailing tax provisions.
Sovereign Gold Bonds have a total maturity of eight years, with the option of premature redemption from the fifth year onwards. Investors who do not opt for early exit can continue to hold the bonds until maturity in 2029, with final returns linked to gold prices prevailing at that time.
