Investors in the Sovereign Gold Bond (SGB) 2020–21 Series-VII have a reason to celebrate, as the Reserve Bank of India (RBI) has released details for early
redemption, and the returns are exceptional. As the bond completes five years since its issue, holders now have the option to cash out at an impressive return of 153 per cent, excluding interest. Redemption Scheduled For October 20 According to the RBI's official communication, the premature redemption date for this tranche is October 20, 2025, exactly five years from its original issue date of October 20, 2020. The redemption price has been fixed at Rs 12,792 per gram, based on the average of the closing prices of gold (999 purity) published by the India Bullion and Jewellers Association (IBJA) over the three working days from October 15 to 17. A Gain of Rs 7,741 Per Gram — Plus Interest The SGB Series-VII was initially offered at Rs 5,051 per gram. With the newly announced redemption price, investors are set to earn Rs 7,741 per gram, marking a 153 per cent gain in capital value alone. This figure does not include the additional 2.5 per cent annual interest, paid semi-annually, which investors received throughout the five years. “The Sovereign Gold Bond Scheme, launched by the government, allows investors to invest in gold without the need to hold it physically,” the RBI explained. Tax-Free Gains and Transparent Pricing SGBs offer more than just high returns. Investors benefit from tax exemptions on capital gains upon maturity. Even in premature redemption cases like this one, the valuation remains fair and transparent, determined by the average market price of gold (999 purity) in the days leading up to redemption. The RBI emphasised that the redemption process requires investors to verify the exact issue date and series of their holdings. Redemption requests must be submitted through the appropriate channel, whether a bank, post office, or agent, in accordance with the RBI’s timeline. Once again, this early redemption window showcases gold’s resilience and the bond scheme’s strength as a long-term investment vehicle, offering both stability and substantial returns without the risks of physical storage.
