The Reserve Bank of India (RBI) has announced the premature redemption price of Sovereign Gold Bond (SGB) 2020-21 Series VII. This bond was issued on October 20, 2020, and investors can redeem it prematurely on October 20, 2025, i.e., upon completion of 5 years.
Investors are getting 153% return
According to the RBI, the redemption price for this series has been fixed at Rs 12,792 per gram. This price is based on the average price of gold over the last three trading days (October 15, 16, and 17, 2025).
When this bond was issued in October 2020, its issue price was Rs 5,051 per gram. Now, if an investor prematurely redeems this bond, they will receive Rs 12,792 — a total return of 153% (excluding interest).
In simple terms, investors will earn approximately Rs 7,741 per gram.
What is SGB and how does it earn money?
SGB, or Sovereign Gold Bond, is a government scheme in which you invest in gold, but do not own the physical gold.
It benefits in two ways:
Capital gains from rising gold prices
Fixed interest of 2.5% per year, paid semi-annually (once every 6 months).
The total tenure of these bonds is 8 years, but investors can redeem them prematurely after 5 years.
Redemption date for this Series
Issue Date: October 20, 2020
Subscription Period: October 12 to 16, 2020
Premature Redemption Date: October 20, 2025
How is the redemption price determined?
As per RBI regulations, the redemption value of SGBs is determined based on the average closing price of 999 purity gold over the last three trading days, as issued by the India Bullion and Jewellers Association (IBJA).
SGBs are a safe and convenient way to invest in gold. Unlike physical gold, there’s no risk of theft or loss, ensuring a completely secure investment. Furthermore, there are no concerns about making charges or the purity of the gold, as the investment is linked solely to the price of the gold, not its physical delivery.
SGBs are guaranteed by the RBI and the Centre, making them even more reliable. These bonds are held securely in demat form, saving investors the hassle of storing physical documents or gold. Furthermore, if investors hold the bonds for eight years, they receive full capital gains tax exemption — meaning tax-free profits. All these factors make SGBs a better, safer, and more prudent investment option than physical gold.
What should investors do?
If you invested in SGB 2020-21 Series VII, this is a crucial time for you.
Confirm your tranche (series) and issue date.
Contact your bank or agency and submit a premature redemption request within the deadline.
Interest and redemption proceeds will be credited directly to your bank account.
