RBI announces premature redemption price of these SGBs at ₹10,070, investors to get 147% return

The Reserve Bank of India has announced the premature redemption price for Sovereign Gold Bonds (SGB) 2019-20 Series-IX and SGB 2020-21 Series-V at a price of ₹10,070 per unit. The redemption date has been set as August 11. 

SGBs have a tenure of eight years, and early redemption is allowed only after the fifth year. Further, redemption can only happen on scheduled interest payout dates (usually every six months).

“The redemption price of SGB shall be based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA),” as per a RBI release dated August 8. 

The redemption price of ₹10,070 per unit is calculated on the basis of a simple average of the closing gold price for the three business days: August 06, August 07 and August 08. 

Return on SGBs

The SGB 2019-20 Series-IX was issued in September 2019 at ₹4,070 per gram, while the SGB 2020-21 Series-V was issued in August 2020 at ₹5,334 per gram. Considering the redemption price, the absolute return on the SGB 2019-20 Series-IX is a stellar 147%, while the SGB 2020-21 Series-V will give a return of 89%. 

This return is over and above the 2.5% interest that is earned on the SGBs annually, giving investors bumper returns on this investment. The interest is credited semi-annually to the investors’ bank accounts, and the last interest instalment is paid upon the SGB’s maturity along with the principal amount. 

Previously, the RBI set the redemption price of the SGB 2017-18 Series II at ₹9,924 per gram, marking a 250% return excluding the interest. This series was originally purchased by investors at ₹2,830 per gram. Further, the premature redemption price of SGB 2018-19 Series-V was set at ₹9,820 per gram by the RBI, giving a 205% return to investors. 

Gold prices

Last week, gold futures (with expiry on October 3, 2025) touched their lifetime high of ₹1,02,250 per 10 gram on the Multi Commodity Exchange (MCX). GoldM (Mini Gold Futures Contracts with September 5, 2025 expiry) also hit its all-time high of ₹1,01,584 per 10 gram on Friday, August 8. 

Domestic gold prices (24K, 99.9% purity) hit a record high of ₹1,03,420 per 10 gram in Delhi on Friday, as per a PTI report citing All India Sarafa Association data. Spot gold peaked at $3,500.33 per ounce during the session on Friday, rising by $104.02 (3.06%). 

However, gold retreated from its all-time high on Monday, snapping a five-day streak. The yellow metal ended ₹900 lower at ₹1,02,520 per 10 gram in the national capital on August 11, as per a PTI report. 

Last week, gold rates jumped ₹5,800 per 10 gram. On the MCX, gold prices increased by over 2.5% in the previous week alone. 

Gold prices have been on a bull run since the start of this year, and the recent boost has been on the back of tariff concerns and significant buying by central banks. The upcoming festive demand is expected to fuel gold further in the coming months.