SGB 2020-21 Series I subscribers to gain up to 229% from premature redemption

For the SGB 2021-21 Series I issue, the Reserve Bank of India (RBI) has announced the premature redemption date as April 28, 2026. The said tranche was issued on April 28, 2020. The RBI guidelines allow premature redemption of gold bonds after the fifth year from the date of issue of such gold bonds on the date on which interest is payable.

Accordingly, the next due date of premature redemption of the above tranche shall be on April 28, 2026, said the RBI’s release.

Sovereign Gold Bonds were introduced by the Centre in 2015 in order to promote and encourage paper investment in gold instead of the otherwise physical investments.

The redemption price of SGB as per the RBI directions is based on a simple average of the closing price of gold 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). Accordingly, the redemption price for premature redemption due on April 28, 2026, shall be ₹15,124/- (Rupees Fifteen Thousand One Hundred and Twenty Four Only) per unit of SGB based on the simple average of the closing price of gold for the three business days i.e., April 23, April 24, and April 27, 2026.

The issue was priced at ₹4,639 per 10 gm, implying hefty gains of 226% for investors who invested via the offline route. Online investors availed a ₹50 discount- meaning issue was priced at ₹4589 and hence gains of 229% for them.

How do you need to apply for early redemption of SGBs?

For applying for premature redemption, investors or subscribers need to submit the premature redemption form with your bank, post office, or Stock Holding Corporation of India (SHCIL) at least 10-30 days in advance of the interest payment date.