The Reserve Bank of India has announced the premature redemption price for Sovereign Gold Bond 2019-20 Series-V. This series was released on October 15, 2019. According to a statement from the central bank, investors will have the option to prematurely redeem this SGB tranche from April 15, 2026. According to the RBI statement, premature redemption of the SGB series will be permitted after completion of 5 years from the date of issue of these gold bonds, on the date on which interest is paid on them. As per a rule of the central bank, the redemption price will be calculated on the basis of the average closing price of gold of 999 purity published by the India Bullion and Jewelers Association (IBJA) for the last three working days.
What will be the cost of premature redemption?
The price of premature redemption on April 15, 2026, has been fixed at Rs 15,009 per unit of SGB. This price has been decided on the basis of the average of the closing prices of gold for the last three trading days—i.e. April 9, April 10 and April 13, 2026. SGB 2019-20 Series-V was issued for online bonds at the rate of Rs 3,738 per gram. On the date of premature redemption, it will give a total simple return of approximately 302 per cent.
One lakh became 4 lakh rupees
Total return works out to Rs 15,009 – Rs 3,738 = Rs 11,271 (without including interest). In percentage terms, this is 11,271 ÷ 3,738 × 100 = 301.53 percent. Approximately 302 per cent return means that if a person had invested Rs 1 lakh in this SGB series at the time of its release in 2019, the value of that amount would now be around Rs 4.02 lakh. This amount does not include the 2.5 percent annual interest that gold bond holders get on their original investment amount. For investors who had purchased SGBs of this series offline, the issue price was Rs 3,788 per gram of gold. A discount of Rs 50 was available on online purchase of SGB.
