The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bonds (SGB) 2020-21 Series-IV (Issue date: July 14, 2020), according to an official statement. While SGBs
carry a maturity period of eight years, premature redemption is permitted after the completion of five years from the date of issuance of each series.
SGB 2020-21 Series-IV issue price
The SGB 2020-21 Series-IV was issued at Rs 4,852 per gram for offline investors. Those who applied online and paid through digital mode received a discount of Rs 50 per gram, bringing their issue price to Rs 4,802 per gram.
Premature redemption price
The premature redemption price of SGB 2020-21 Series-IV, due on January 14, 2026, has been fixed at Rs 13,929 per unit. This price is based on the simple average of the closing price of gold for the three business days — January 9, January 12 and January 13, 2026.
Investor returns
Since the bond was issued at Rs 4,802 per gram, the premature redemption value translates into an absolute gain of Rs 9,127 per unit (Rs 13,929 minus Rs 4,802), excluding interest.
In percentage terms, this works out to a return of about 190 percent on the initial investment. In simple absolute terms, the investment has grown by nearly 266 percent by the premature redemption date.
SGB interest rate
Sovereign Gold Bonds carry an interest rate of 2.50 percent per annum on the initial investment amount. The interest is credited semi-annually to the investor’s bank account. The final interest instalment is paid along with the principal on the bond’s maturity.
Sovereign Gold Bond scheme
The Sovereign Gold Bond scheme, operated by the RBI on behalf of the Government of India, provides investors with a secure paper or demat alternative to physical gold. It eliminates storage and purity concerns while offering an annual interest of 2.5 percent. Premature redemption is allowed after five years from the date of issue, on interest payout dates.
How SGB prices are fixed
The nominal value of Sovereign Gold Bonds is fixed in Indian rupees based on the simple average of the closing price of gold of 999 purity, as published by the India Bullion and Jewellers Association Limited (IBJA), for the last three business days of the week preceding the subscription period.
