Sovereign Gold Bonds Deliver Up to 147% Returns: RBI Announces Premature Redemption for 2019-20 & 2020-21 Series
The Reserve Bank of India (RBI) has given investors in Sovereign Gold Bonds (SGBs) a golden opportunity — literally. In a fresh announcement, the central bank has declared the premature redemption price for SGBs issued under the 2019-20 (Series IX) and 2020-21 (Series V) schemes. Holders of these bonds can redeem them ahead of the full eight-year maturity on August 11, 2025, potentially locking in substantial profits.
Why This Matters for Investors
SGBs typically mature in eight years, but investors are allowed to opt for early redemption after five years — only on interest payment dates. This early exit option means that those who purchased these bonds in September 2019 or August 2020 can cash out now, taking advantage of the sharp rise in gold prices.
For the 2019-20 Series IX bonds, issued at ₹4,070 per gram, the RBI has set the premature redemption price at ₹10,070 per gram. That’s a massive 147% return over five years — a gain of ₹6,000 per gram.
For the 2020-21 Series V bonds, issued at ₹5,334 per gram, the redemption price of ₹10,070 translates to an 89% return, or a profit of ₹4,736 per gram.
What Are Sovereign Gold Bonds?
Sovereign Gold Bonds are government-backed securities issued by the RBI on behalf of the Government of India. Instead of buying physical gold, investors purchase a paper or dematerialised certificate, eliminating concerns about storage or purity.
Key features include:
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Fixed 2.5% annual interest on the initial investment, paid semi-annually.
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Bonds are tradable, transferable, and can be used as collateral for loans.
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No making charges or GST, unlike physical gold purchases.
SGBs are considered one of the safest and most tax-efficient ways to invest in gold, with the added benefit of earning interest alongside price appreciation.
How the Redemption Price is Calculated
According to RBI’s August 8, 2025 press release, the premature redemption price is based on the simple average closing price of gold (999 purity) for the last three working days before the redemption date, as published by the India Bullion and Jewellers Association (IBJA). For this round, prices from August 6, 7, and 8, 2025 were averaged to arrive at ₹10,070 per gram.
How to Redeem Your SGBs Early
If you wish to opt for premature redemption on August 11, 2025, here’s the process:
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Submit a redemption request at your bank, post office, Stock Holding Corporation of India Ltd. (SHCIL) branch, or through your issuing agent at least one day before the payout date.
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Fill out the redemption form with complete details, including your bank account and demat information, and provide your signature.
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On the redemption date, the RBI will transfer both your principal (calculated at the declared redemption price) and the final interest payment directly to your linked bank account.
Tax Implications
While the capital gains on SGB redemption after maturity are tax-free for individuals, gains from premature redemption may still attract capital gains tax, depending on the investor’s holding period and tax bracket. It’s advisable to consult a tax professional before making a decision.
A Win-Win for Gold Investors
Gold has seen a strong upward trend in recent years, fueled by global economic uncertainties, inflation concerns, and currency volatility. This has significantly boosted the returns on SGBs compared to other fixed-income instruments. The combination of government backing, fixed interest, and market-linked capital appreciation makes SGBs an attractive investment for both conservative and growth-oriented investors.
For those holding the 2019-20 and 2020-21 series, August 11, 2025 could be a golden payday — quite literally turning every gram of investment into nearly double (or more) of its original value.
