SGBs continue to shine: Redemption price for 2019-20 Series-III set at ₹9,991/g, delivering 185% returns

The Reserve Bank of India has announced the premature redemption price for yet another Sovereign Gold Bond (SGB) series, delivering bumper returns to investors who made the wise decision to buy these bonds when the government was still announcing new tranches.

The redemption price for the Sovereign Gold Bond (SGB) 2019-20 Series-III, for which the redemption date is August 14, is set at ₹9,991 per gram. Compared to the issue price of ₹3,499 per gram, investors will get a return of 185%, along with a 2.5% annual interest on these bonds.

As per the rules, SGBs have a tenure of eight years, and premature redemption is allowed only after the fifth year from the bond’s issuance. Further, premature redemption can only happen on scheduled interest payout dates (every six months). The Sovereign Gold Bond (SGB) 2019-20 Series-III was issued on August 14, 2019.

How is the redemption price calculated for SGBs?

The redemption price of SGBs is calculated on the basis of the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption, as per the RBI. The rates published by the India Bullion and Jewellers Association Ltd (IBJA) are taken into consideration for calculating the price. The price of this tranche is calculated on the basis of gold prices on August 11, 12 and 13.

Other SGBs

SGBs are government-backed securities that are measured in grams of gold, serving as a convenient alternative to physical gold. Since November 2015, when the first SGB tranche was issued, the government has offered 67 tranches.

Between April and September 2024, as many as 26 SGB series were due for premature redemption. This year, between April and September 2025, 34 series are scheduled for early redemption. The RBI publishes the list of SGBs up for premature redemption every six months, and opens applications for investors to redeem their units earlier than maturity.

In the past month, the RBI has announced the redemption price of many SGB tranches. These SGBs have given a mega return of up to 250% to investors on the back of gold’s seemingly endless bull run.

• Sovereign Gold Bond (SGB) 2017-18 Series II, which matured on July 28, 2025, gave a 250.67% return to investors. Its redemption rate was set at ₹9,924 per gram, while it was issued at just ₹2,830 per gram in 2017.

• Sovereign Gold Bonds (SGB) 2018-19 Series-V delivered a return of 205%, with its premature redemption price set at ₹9,820 per unit, up from its issue price of ₹3,214 per gram. These SGBs were issued in 2019 and were due for premature redemption on July 22.

• Sovereign Gold Bonds (SGB) 2019-20 Series-IX, issued at ₹4,070 per gram in September 2019, gave a return of 147% to investors with its premature redemption price set at ₹10,070 per unit. The redemption date was set as August 11.

• Sovereign Gold Bonds (SGB) 2020-21 Series-V gave a return of 89%. Issued in August 2020 at ₹5,334 per gram, the premature redemption price was set at ₹10,070 per unit, and the redemption date was August 11.

Here are the details of the SGBs that are yet to be opened for premature redemption for the April-September 2025 period:

The request window refers to the time when investors can apply for premature redemption.

As of March 31, 2025, SGBs have garnered subscriptions of about 146.96 tons of gold, amounting to about ₹72,275 crore through 67 different tranches.

On top of the returns and annual interest, SGBs are also exempt from tax if you redeem the units through the RBI’s premature exit window. In case you miss the window and sell your units on stock exchanges, capital gains tax will be applicable.

Due to rising gold prices, the central government discontinued the SGB scheme in the Union Budget 2025. Gold prices have increased by over 25% since the start of this year, and gold’s bull run is expected to continue due to global dynamics, market volatility and geopolitical concerns. In the current environment, US tariff concerns, central bank gold buying and safe haven demand are fuelling gold’s upward momentum.

The government isn’t likely to issue new SGB tranches until they are cost-effective as compared to other borrowing tools like Government Securities and Treasury Bills.