gold bond
The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond (SGB) 2020-21 Series-VII. This bond was issued on 20 October 2020 and now investors can encash it from 20 April 2026. According to RBI, SGBs are allowed to be redeemed prematurely on the interest payment date, 5 years after issue.
How is the redemption price determined?
As per RBI rules, the redemption price of SGB is based on the average market price of gold of 999 purity. For this, the average of the closing prices of the last three working days published by the India Bullion and Jewelers Association (IBJA) is taken. This time the price has been decided on the basis of the prices of 15, 16 and 17 April 2026.
Price fixed at ₹15,254 per unit
RBI has fixed the redemption price of SGB 2020-21 Series-VII for April 20, 2026 at ₹15,254 per unit. This price is much higher than the time when this bond was issued.
Great returns up to 205%
For those purchasing SGBs of this series online in 2020, the issue price was ₹ 5,001 per gram, while for offline purchases it was ₹ 5,051. Online investors were given a discount of ₹50 per gram. If we consider the price of ₹ 5,001 as the base, then after getting ₹ 15,254, there is a profit of ₹ 10,253 per unit. This is a direct return of around 205% (not including 2.5% annual interest).
Investment of ₹1 lakh became ₹3.05 lakh
If you understand in simple words, if an investor had invested ₹ 1 lakh in this SGB series in 2020, then its value would have been around ₹ 3.05 lakh. The 2.5% annual interest received in this is separate, which further increases the total return.
What is SGB and why is it special
Sovereign Gold Bond (SGB) is a security issued by the government, which is denominated in grams of gold. It is considered a safe option to buy physical gold. In this, the investor does not need to buy and keep gold, but he gets the benefit of increase in the price of gold.
Interest and payment arrangements
Investors on SGB get a fixed interest rate of 2.5% per annum, which is deposited in their bank account every six months. On maturity, along with the principal amount, the final interest is also given.
