RBI Announces Premature Redemption Price for SGB 2020-21 Series-II

The Reserve Bank of India (RBI) has declared the premature redemption price for Sovereign Gold Bond (SGB) 2020-21 Series-II. These bonds, issued in May 2020, have an eight-year maturity. However, investors are allowed to exit after five years, only on interest payment dates.

Issue Price of the SGB 2020-21 Series-II

The issue price set during the subscription period was:

• ₹4,590 per gram for offline investors
• ₹4,540 per gram for online applicants (after a ₹50 per gram discount)

Investors who purchased online at ₹4,540 per gram are eligible for the current premature redemption.

Premature Redemption Price for 2025

The RBI has fixed the premature redemption price at ₹12,330 per unit, due on 19 November 2025.

 This price is based on the simple average of the closing price of 999 purity gold for November 14, 17 and 18, 2025.

Returns Earned by Investors

From the issue price of Rs 4,540 per gram in 2020, investors will earn a strong return:

• Total gain: ₹12,330 – ₹4,540 =  ₹7,790
• Simple return: (7,790 ÷ 4,540) × 100 = 171.5%

This return calculation excludes the interest income earned over the five-year holding period.

Interest Benefits Under the SGB Scheme

Sovereign Gold Bonds offer an interest rate of 2.5% per annum, paid on the initial investment amount.

 Interest is credited to the investor’s bank account twice a year, and the final interest payment is made along with the principal at maturity.

Overview of the SGB Scheme

The Sovereign Gold Bond Scheme is managed by the RBI on behalf of the Government of India. It provides a secure alternative to physical gold and removes worries about purity, storage or theft.

Key features include:

• Denomination in grams of gold
• Redemption in cash based on prevailing gold prices
• Transferability and tradability on stock exchanges
• Eligibility for individuals, HUFs, trusts, universities and charitable institutions
• Bonds can also be used as loan collateral

Redemption Process

Both the interest payouts and the final redemption amount are directly credited to the investor’s registered bank account. Investors do not need to make any separate request unless they wish to redeem prematurely.

Read more: BEML Share Price in Focus After Facing Delays in Launching Vande Bharat Sleeper Trains.

Conclusion

The premature redemption of SGB 2020-21 Series-II offers investors a substantial return of over 171% in five years, along with the added benefit of interest income. With secure returns linked to gold prices and no physical handling involved, SGBs continue to be a reliable long-term savings option for Indian investors.

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.