The Reserve Bank of India (RBI) has announced the premature redemption date and price for the Sovereign Gold Bond (SGB) 2020-21 Series-VII, rewarding investors with strong gains on their five-year holding.
Investors who purchased the tranche issued on October 20, 2020, at Rs 5,051 per gram, will receive Rs 12,792 per gram on October 20, 2025, marking an impressive absolute return of 153.26%, excluding semi-annual interest payouts.
The SGB scheme, a joint initiative of the Government of India and RBI, allows investors to hold gold in paper or demat form instead of physical gold, offering both safety and inflation-linked returns. Premature redemption is permitted only after five years from the date of issue and can be exercised only on interest payment dates.
According to the RBI circular referencing GOI Notification F.No.4(4)-B(W&M)/2020 dated October 9, 2020, the redemption price has been calculated based on the simple average of closing prices of gold (999 purity) as published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days – October 15, 16, and 17, 2025.
Investors seeking early redemption are advised to verify their tranche and submit requests as per the RBI’s schedule through their bank, stockholding corporation, or designated agent. Only eligible investors who have completed the mandatory five-year holding period will be able to redeem their bonds on the specified date.
SGBs continue to stand out as a superior alternative to physical gold, offering the dual benefit of market-linked capital appreciation and fixed annual interest of 2.5%, paid semi-annually. Unlike physical gold, SGBs eliminate risks related to theft, purity, and storage costs, while transactions remain fully traceable and secure.
Investors may also choose to hold their SGBs till full maturity of eight years to enjoy capital gains tax exemption, making them an efficient long-term wealth preservation tool. The 2020-21 Series-VII redemption underscores how SGBs combine the emotional appeal of gold with the discipline of a regulated financial product, providing both stability and growth for Indian investors.
SGB full redemption
Earlier this week, RBI announced the final redemption price for the Sovereign Gold Bond (SGB) 2017-18 Series-III at Rs 12,567 per gram, with redemption scheduled for October 16, 2025. The price is based on the simple average of closing gold prices (999 purity) over October 13-15, 2025.
Originally issued at Rs 2,866 per gram in October 2017, the bonds have delivered an impressive 338% absolute return over eight years, excluding the 2.5% annual interest paid to investors. In real terms, an investor who bought one unit at Rs 2,866 would gain Rs 9,701 in capital appreciation by maturity.
The SGB scheme, managed by the RBI on behalf of the Government of India, offers investors a safe and convenient alternative to physical gold. It provides multiple benefits-no storage worries, purity assurance, fixed annual interest, tradability, and loan collateral eligibility.
Eligible investors include resident individuals, HUFs, trusts, and institutions, with premature redemption permitted after five years. Upon maturity, proceeds are directly credited to the registered bank account.
With gold prices near record highs, this redemption underscores the strong long-term performance of sovereign gold bonds as a secure and rewarding investment avenue.