SGBs deliver 166% returns: RBI announces premature redemption price for Sovereign Gold Bond 2020-21 Series-I

The Reserve Bank of India announced the premature redemption price for the Sovereign Gold Bond (SGB) 2020-21 Series-I, which was issued on October 28, 2020. SGBs have a tenure of eight years, but they can be redeemed early after five years from issuance.

The price has been set at ₹12,198 per unit. It has been calculated on the basis of the closing price of gold of 999 purity of the previous three business days from the date of redemption: October 23, October 24, and October 27. For calculating SGB redemption prices, India Bullion and Jewellers Association Ltd (IBJA) prices are taken into account, as per RBI rules.

For this series, investors will have the option to redeem the tranche prematurely from October 28, 2025. Premature redemption is permitted on the date when interest is payable, according to the RBI.

SGBs attract 2.5% annual interest, along with the returns they offer. The interest is credited into the subscribers’ accounts twice a year.

Returns on Sovereign Gold Bond (SGB) 2020-21 Series-I

The early redemption price for the SGB tranche has been set at ₹12,198 per gram. The series was initially issued at ₹4,589 per gram (online) and ₹4,639 per gram (offline).

When compared to the issue price, this SGB tranche delivered an impressive absolute return of 166%. This return excludes the interest on the SGB.

• Issue price: ₹4,589 per gram (online)
• Redemption price: ₹12,198 per gram
• Returns: ₹12,198 - ₹4,589 = ₹7,609 per gram
• (₹7,609 ÷ ₹4,589) × 100 = 166%

SGB returns in 2025

So far in 2025, SGBs have delivered exceptional returns due to rising gold prices. Gold prices jumped nearly 60% in October when compared to last Diwali, making it a spectacular year for the precious metal. However, prices have fallen from the record highs due to easing geopolitical tensions as a US-China trade deal is making progress.

SGB tranches have given up to 325% returns this year, most delivering over 100% returns. Here are the major SGBs and their redemption prices announced in the last few months:

SGB calendar

Gold prices and SGBs

With rising gold prices, the government discontinued the SGB scheme in the Union Budget 2025. The scheme is unlikely to be continued until gold prices ease up, and the government is not expected to release new tranches until the bonds become cost-effective like other government schemes and investment tools.

While gold prices have fallen from record highs, they’re still elevated due to the current geopolitical scenario, volatile markets, central bank gold buying and other global dynamics.

The RBI recently reported that its gold reserves surpassed 880 metric tonnes in the first half of 2025-26

Central banks around the world have been buying gold aggressively as a hedge against geopolitical risks, inflation and currency volatility. This trend reflects a broader move toward diversification of foreign exchange reserves. As per some reports, many emerging economies, including China and India, are increasing their gold holdings to reduce dependence on the dollar-based global financial system.