Sovereign Gold Bond: RBI has announced the premature redemption price for another series of Sovereign Gold Bonds. Investors will receive a robust return of 171% over the issue price of ₹4,540. This series will become eligible for premature redemption on November 19, upon completion of five years. Learn the details.
Sovereign Gold Bond: The Reserve Bank of India (RBI) has announced that investors in Sovereign Gold Bond (SGB) 2020-21 Series II will be eligible for premature redemption from November 19, 2025. This is the same series that was issued on May 19, 2020. According to the rules, SGBs can be redeemed prematurely after five years, only on the interest payment date. The upcoming date satisfies this condition.
How the Redemption Price Was Determined
The RBI has fixed the redemption price for this tranche at ₹12,330 per unit. This price is based on the average closing price of 999 purity gold for three trading days—November 14, 17, and 18, 2025—published by the India Bullion and Jewellers Association (IBJA).
Significant Investor Benefits
Investors are receiving strong returns in this series. Those who purchased SGBs at the issue price of ₹4,540 per unit now have the opportunity to redeem them at ₹12,330 per unit. This translates to a direct profit of ₹7,790 per gram, which translates to a total return of approximately 171.5%.
In addition, investors also receive a semiannual interest income of 2.5% for five years. This option provides significantly better returns than many traditional investments.
Premature Redemption Process
The total tenure of SGBs is 8 years, but investors can redeem them prematurely on any interest payment date after the fifth year. To do this, investors must submit a redemption request to their bank, post office, or the agent where the SGB was purchased. This process usually takes a few days in advance.
What is the SGB Scheme?
The Government of India launched the SGB scheme in November 2015. Its purpose was to provide people with a safe, storage-free alternative to purchasing physical gold. The RBI issues these bonds in gold denominations, meaning your investment is measured in terms of “gold,” not in terms of money.
Investors receive 2.5% annual interest, plus capital gains when gold prices rise. The scheme aimed to reduce the country’s dependence on gold imports and channel domestic savings into financial instruments.
How SGBs Work
SGBs can be purchased from banks, SHCIL, and various designated post offices. Investors receive a certificate upon offline purchase. Online purchase details are directly credited to their demat account. SGBs earn a 2.5% annual interest rate, paid every six months. These bonds are also traded on exchanges and can be collateralized for loans if needed.
How SGBs Are Taxed
The 2.5% interest earned on SGBs is taxable under the Income Tax Act. However, when the investor redeems the bonds through the RBI, capital gains tax is not applicable. If an investor earns a capital gain by selling SGBs on the exchange, they receive indexation benefits.
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