SGB premature redemption today: What ₹2 lakh invested in 2019 is worth now at ₹15,102 redemption price

Investors holding Sovereign Gold Bond (SGB) 2018-19 Series VI can opt for premature redemption today, August 12, 2026. The Reserve Bank of India (RBI) has announced a redemption price of ₹15,102 per unit for the tranche.

The SGB 2018-19 Series VI was issued on February 12, 2019. As per the RBI communication, "premature redemption of a Sovereign Gold Bond is permitted after the fifth year from the date of issue, on the date on which interest is payable. Accordingly, August 12, 2026, is the next eligible premature redemption date for this tranche."

What was the original SGB issue price?

The SGB 2018-19 Series VI was issued at ₹3,326 per gram during its February 2019 subscription period.

Investors who applied online and made payments through digital modes received a ₹50 per gram discount, making their effective issue price ₹3,276 per gram.

At the regular issue price, the increase in the redemption price is:

₹15,102 - ₹3,326 = ₹11,776 per unit

That means the gold-linked value has risen by approximately 354% from the original issue price.

What if you invested around ₹2 lakh in 2019?

If an investor had purchased 60 grams, of SGB 2018-19 Series VI.

At the original issue price of ₹3,326 per gram:

60 × ₹3,326 = ₹1,99,560

So, the investor's initial investment was ₹1,99,560, or nearly ₹2 lakh.

At the premature redemption price of ₹15,102 per unit:

60 × ₹15,102 = ₹9,06,120

The investment would therefore be worth ₹9.06 lakh on redemption.

The capital appreciation would be:

₹9,06,120 - ₹1,99,560 = ₹7,06,560

The investor would have made a capital gain of approximately ₹7.07 lakh, representing a gain of about 354% on the original investment.

SGB interest

Sovereign Gold Bonds carry a fixed interest rate of 2.5% per annum, payable half-yearly on the original investment amount.

For an investment of ₹1,99,560, the annual interest works out to:

₹1,99,560 × 2.5% = ₹4,989

Over 7.5 years, the simple interest would be approximately ₹37,418, assuming all scheduled interest payments were received.

That means the broad value of the investment over the holding period would be around ₹9.44 lakh, comprising the ₹9.06 lakh redemption value and approximately ₹37,418 in interest received.

The SGB 2018-19 Series VI subscription was open from February 4 to February 8, 2019, with the settlement date on February 12, 2019.

For investors holding this tranche, the ₹15,102 redemption price means that an investment of nearly ₹2 lakh made in 2019 has grown to more than ₹9 lakh in redemption value, apart from the interest earned during the holding period.