SGB redemption update: RBI fixes Rs 10,610 per unit for 2020-21 bonds, investors bag 107% return

The Reserve Bank of India (RBI) on Friday announced that investors of Sovereign Gold Bonds (SGB) 2020-21 Series VI, issued on September 8, 2020, will be able to opt for premature redemption on September 6, 2025. The redemption price has been fixed at Rs 10,610 per unit.

According to the RBI statement, the price has been arrived at on the basis of the simple average of the closing gold prices of 999 purity for the previous three business days—September 3, 4, and 5, 2025—as published by the India Bullion and Jewellers Association Ltd (IBJA), according to an ET report.

The SGB 2020-21 Series VI was issued at Rs 5,117 per gram. Based on the redemption price, the bonds will deliver an absolute simple return of 107.35%, or Rs 5,493 per unit, excluding the 2.5% annual interest that investors also receive.

Launched by the Government of India and managed by the RBI, the Sovereign Gold Bond scheme offers investors a demat or paper alternative to physical gold while eliminating storage and purity risks. The tenure is eight years, with an option for premature redemption allowed only after the fifth year from the date of issue, on interest payout dates.

SGBs pay 2.5% fixed annual interest, credited semi-annually to investors’ bank accounts. The final interest instalment is payable on maturity along with the principal. The bonds are tradable, transferable, and can also be used as collateral for loans.

The RBI said investors should review redemption schedules and ensure their requests for premature redemption are submitted within the prescribed deadlines.