SGB 2020-21 Series XII investors see gold bond value more than triple to ₹15,355 in five-and-a-half years

The Reserve Bank of India (RBI) has fixed the premature redemption price for Sovereign Gold Bond (SGB) 2020-21 Series XII at ₹15,355 per gram, with the redemption due on September 9, 2026.

The SGB 2020-21 Series XII was issued on March 9, 2021, at an issue price of ₹4,662 per gram. Investors applying online and making payment through digital mode were offered a ₹50 per gram discount, taking their effective issue price to ₹4,612 per gram.

Under the SGB scheme, premature redemption is permitted after five years from the date of issue on an interest-payment date. RBI's FAQ on Sovereign Gold Bonds states that the bond has an eight-year tenor, with an exit option available from the fifth year onwards on interest-payment dates.

The ₹15,355 redemption price represents a gain of about 229% over the original issue price of ₹4,662 per gram, excluding the interest earned during the holding period.

₹1 lakh investment could be worth nearly ₹3.29 lakh

An investor who put ₹1 lakh into Series XII at the original issue price of ₹4,662 per gram would have acquired around 21.45 grams of SGB units.

At the redemption price of ₹15,355 per gram, the holding would be worth approximately ₹3.29 lakh.

That translates into a capital gain of around ₹2.29 lakh, or an absolute return of approximately 229%.

For investors who received the digital-payment discount and bought at ₹4,612 per gram, a ₹1 lakh investment would be worth approximately ₹3.33 lakh, representing an absolute return of around 233%.

Redemption price based on IBJA gold prices

The RBI says the redemption price of SGBs is based on the simple average of the closing price of gold of 999 purity for the previous three business days, as published by the India Bullion and Jewellers Association Ltd (IBJA).

For the September 9, 2026 redemption, the three reference days were September 4, September 7 and September 8, 2026.

Series XII carries an annual interest rate of 2.5% on the initial investment amount, with interest paid half-yearly. Therefore, investors who have held the bond since March 2021 have also received periodic interest payments in addition to the increase in the value of their gold-linked investment.

The redemption price of ₹15,355 per gram is specific to SGB 2020-21 Series XII. Other SGB tranches have different redemption prices depending on the applicable gold-price calculation and redemption date.