This SGB series has given 205% return till July 2025; RBI announces its premature redemption price

The Reserve Bank of India (RBI) has announced the early redemption price for Sovereign Gold Bonds (SGB) 2018-19 Series-V, which is due for premature redemption on Tuesday, July 22, 2025. 

The premature redemption price has been set as ₹9,820 per unit. This marks a return of over 205% on the investment. Let’s learn about SGBs and how investors earned this much return. 

What are SGBs?

Sovereign Gold Bonds, or SGBs, are government-backed securities that are measured in grams of gold, acting as a substitute for physical gold. For SGBs, investors make payment in cash, and the settlement (redemption) is also done in cash. The RBI issues these bonds on behalf of the central government.

These bonds have a maturity tenure of 8 years from the date of issuance, and premature redemption is allowed only after five years from issuance. 

“…preemature redemption of Gold Bond may be permitted after fifth year from the date of issue of such Gold Bond on the date on which interest is payable. Accordingly, the next due date of premature redemption of the above tranche shall be on July 22, 2025,” the RBI said in a release on Monday, July 21. 

How is the SGB redemption price calculated?

As per the RBI, the redemption price of SGBs is calculated based on the average closing gold prices over the previous three business days. The redemption price for SGBs due for premature redemption due on July 22, 2025, has been calculated based on closing gold prices over these three days: July 17, July 18 and July 21. 

“Further, the redemption price of SGB shall be based on simple average of closing gold price of 999 purity of 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 July 22, 2025, shall be ₹9,820/- (Rupees Nine Thousand Eight Hundred and Twenty only) per unit of SGB based on the simple average of closing gold price for the three business days i.e., July 17, July 18 and July 21, 2025,” the release stated. 

Returns on SGBs

The issue price of these bonds in 2019 was ₹3,214 per gram, leading to a gain of 205.56% on the investment, excluding interest earnings. The absolute gain on these bonds is at ₹6,606 per gram. 

Investors also earn a fixed interest of 2.50% per year on the initial investment. Further, the interest is credited twice a year on a semi-annual basis, and the last interest payment is made upon the maturity of the bond along with the principal amount. 

Gold has given spectacular returns to investors in 2025, rising by over 26%. Gold rates climbed to over ₹1 lakh per 10 gram in Delhi on Tuesday, reaching ₹1,00,020 per 10 gram (99.9% purity, 24K).