Sovereign Gold Bond 2019-20 Series-VI: Investors to get 217% returns on this SGB tranche; check key details

The Reserve Bank of India (RBI) has announced the final redemption price for the Sovereign Gold Bond (SGB) 2019-20 Series-VI, which was originally issued on October 30, 2019. Investors will be able to redeem their holdings early on October 30, 2025.

Although SGBs carry a maturity period of eight years, they can be redeemed prematurely after five years from the date of issue. The early redemption price has been fixed at ₹11,992 per gram, marking a substantial 217% absolute return from the issue price of ₹3,785 per gram.

"....the redemption price of SGB shall be 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 October 30, 2025, shall be ₹11,992/- (Rupees Eleven Thousand Nine Hundred and Ninety Two only) per unit of SGB, based on the simple average of closing price of gold for the three business days i.e., October 27, 2025, October 28, 2025, and October 29, 2025," RBI said.

Returns calculation

The redemption price of these bonds is calculated on the basis of 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).

For SGB 2019-20 Series-VI, the closing prices of gold for these three days were taken: October 27, October 28 and October 29.

Calculation:

• Issue price: ₹3,785 per gram (online)
• Redemption price: ₹11,992 per gram
• Returns: ₹11,992 - ₹3,785 = ₹8,207 per gram
• (₹8,207 ÷ ₹3,785) × 100 = 217%

SGBs: 6 key things to know

• SGBs are government-backed securities that are measured in grams of gold. They act as a substitute for physical gold.

• SGBs offer an annual interest of 2.5% on top of the returns to investors. This interest is paid twice a year.

• The RBI releases a list of Sovereign Gold Bonds eligible for premature redemption every six months and invites investors to apply for early exit.

• The quantity of gold for which the investor pays is protected, since he/she receives the ongoing market price at the time of redemption or premature redemption.

• The RBI issues these bonds on behalf of the central government.

On October 29, the central bank also announced the final redemption price for SGB Series-V due on October 30, 2025. Investors of this SGB series will be able to book a profit of approximately 303%.