RBI Sets Sovereign Gold Bond 2019-20 Series VI Premature Redemption Price at ₹14,213 Per Gram

The Reserve Bank of India has fixed the premature redemption price for Sovereign Gold Bond (SGB) 2019-20 Series VI at ₹14,213 per gram. Investors holding this tranche can redeem their bonds on October 30, 2026. 

The bonds were issued on October 30, 2019, and have now completed five years, making them eligible for premature redemption under the scheme. 

How Is the Redemption Price Calculated? 

The RBI arrived at the price using the simple average of the closing gold prices recorded on October 27, 28 and 29, 2026. The calculation is based on the price of 999-purity gold published by the India Bullion and Jewellers Association (IBJA). 

What Returns Can Investors Expect? 

The original issue price was ₹3,835 per gram for offline subscribers. Investors who applied online and paid digitally received a ₹50 discount, bringing their purchase price to ₹3,785 per gram. 

At the redemption price of ₹14,213, offline investors stand to make a capital gain of ₹10,378 per gram, or 270.61%. For online subscribers, the gain works out to ₹10,428 per gram, translating into a return of 275.51%. 

These figures reflect the difference between the issue price and redemption price. Actual gains may vary. 

Interest Income from the Bonds 

Apart from the change in gold prices, SGBs carry a fixed interest rate of 2.5% per annum on the bond's nominal value. Interest is paid twice a year, with the final instalment payable along with the redemption amount. 

For a holding of 10 grams purchased at the original offline issue price, the annual interest would be ₹958.75. Over seven full years, the estimated interest income would total ₹6,711.25, assuming all scheduled payments are received. 

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Conclusion 

The October 30 redemption gives holders of SGB 2019-20 Series VI an opportunity to exit at ₹14,213 per gram. Alongside the capital appreciation, investors have also earned interest during the holding period. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.