2 weeks ago
RBI okays premature redemption, SGB holders reap 4-fold bonanza
Imagine you bought special gold bonds from the Reserve Bank of India.
These bonds are like receipts you could trade in for money based on the price of gold.
Seven years ago, each bond cost about Rs 3,449.
Now the bank says each bond can be cashed in early for Rs 15,310.
That means your money grew more than four times!
Investors can redeem these bonds starting August 14, 2026, after holding them for seven years.
The price is based on the recent closing price of pure gold.
Someone who invested Rs 1 lakh would get back about Rs 4.44 lakh.
They also earned 2.5 percent interest every year while they waited.
That is how rising gold prices made these bond holders very happy.
The RBI fixed the premature redemption price for Sovereign Gold Bond 2019-20 Series III at Rs 15,310 per unit, more than four times the online issue price of Rs 3,449.
Investors can redeem the bonds prematurely from August 14, 2026, after a seven-year holding period since issue on August 14, 2019.
The absolute gain per unit is Rs 11,861, or about 343.9 percent, excluding interest earned during the holding period.
The redemption price is the simple average of 999-purity gold closing prices on August 11, 12 and 13, as published by the India Bullion and Jewellers Association (IBJA).
A Rs 1 lakh investment (about 28.99 units) would be worth around Rs 4.44 lakh at redemption, with roughly 23.7 percent annualised capital appreciation plus 2.5 percent annual interest.
- Who
- Investors in the Reserve Bank of India's Sovereign Gold Bond 2019-20 Series III, and the Reserve Bank of India.
- What
- The RBI announced premature redemption of SGB 2019-20 Series III at Rs 15,310 per unit, over four times the issue price.
- Where
- India
- When
- Redemption becomes available from August 14, 2026, for bonds issued on August 14, 2019.
- Why
- SGB rules allow premature redemption after the fifth year on interest payment dates, and gold prices have risen sharply over the holding period.
Key facts
- Bond Series
- Sovereign Gold Bond 2019-20 Series III
- Issue Date
- August 14, 2019
- Redemption Starts
- August 14, 2026
- Issue Price (online)
- Rs 3,449 per gram
- Redemption Price
- Rs 15,310 per unit
- Capital Gain Per Unit
- Rs 11,861 (~343.9%)
- Annualised Capital Appreciation
- ~23.7% over 7 years
- Interest Rate
- 2.5% per annum, paid semi-annually
Quotes
Reserve Bank of India
Central bank authority of India
“The RBI has fixed this redemption price at more than four times the issue price of Rs 3,449 per gram for investors who applied online”
thehansindia.com
“The price translates into an absolute gain of Rs 11,861 per unit, or about 343.9 per cent, on the initial investment”
thehansindia.com
Sources
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