RBI Sets SGB 2020-21 Series-I Premature Redemption Price at Rs 15,124 Per Unit
Sovereign Gold Bond investors can redeem from April 28, 2026 at 230% return excluding interest
Quick Look
- The Reserve Bank of India has announced a premature redemption price of Rs 15,124 per unit for Sovereign Gold Bond SGB 2020-21 Series-I, redeemable from April 28, 2026.
- The bonds were issued at Rs 4,589 per gram (online) and Rs 4,639 per gram (offline) on April 28, 2020, offering investors a return of nearly 230% on their initial investment, excluding the 2.5% annual interest.
AI-generated summary
The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond SGB 2020-21 Series-I (Issue date April 28, 2020). Investors can redeem these bonds from April 28, 2026.
The premature redemption price has been fixed at Rs 15,124 per unit. This offers investors a substantial return of nearly 230% on their initial investment, excluding interest.
The redemption value is calculated using the simple average closing price of gold of 999 purity, as published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days (April 23, April 24 and April 27, 2026), as per Central Bank guidelines.
The SGB 2020-21 Series-I was issued at Rs 4,589 per gram for online subscriptions. For investors who bought SGBs of the same series offline, the issue price was Rs 4,639 per gram of gold. A Rs 50 discount was available on the online purchase of the SGB.
The absolute return comes to be Rs 15,124 - Rs 4,589 = Rs 10,535 (without factoring in the interest of 2.5%). In percentage terms, it is 15,124 ÷ 4,589 × 100 = 230% (approx.).
A 230% return means that if a person invested Rs 1 lakh in this SGB series at the time of its issuance in April 2020, the value of that investment now would be about Rs 3.30 lakh, as per the declared premature redemption price. This amount doesn't include a 2.5% annual interest that gold bond holders get on the principal investment amount.
SGBs are government securities denominated in grams of gold. They are substitutes to holding physical gold. Investors have to pay the issue price in cash and the bonds are redeemed in cash on maturity. The gold bond is issued by the RBI on behalf of the Government of India.
The minimum investment in SGB is 1 gram for a client. There is a maximum buying limit of 4,000 grams (4 kg) for individual and the HUF investor category and 20,000 grams for Trust and similar entities notified by government per fiscal year.
The bonds offer interest at the rate of 2.50% (fixed rate) per annum on the amount of the initial investment. Interest is credited semi-annually to the bank account of the investor and the last interest is payable on the maturity of the bond along with the principal.
The premature redemption of the SGB series will be permitted after five years from the issue date of the gold bonds, specifically on the date when interest is payable, as stated by the RBI.
