Sovereign Gold Bond alert! RBI opens early exit window – Check if you’re eligible!

To facilitate the early encashing of Sovereign Gold Bonds (SGBs), the Reserve Bank of India (RBI) has announced the dates for premature redemption of these securities for buyers between April and September 2025.

In a circular dated February 21, 2025, the RBI also shared the process for investors who want to redeem their SGBs early. If you’re holding these bonds and considering early exit, this is the window to apply!

In terms of the Consolidated Procedural Guidelines on the SGB scheme, premature redemption of the gold bonds is permitted after five years from the date of issue of such bonds.

Accordingly, the circular said that details of tranches falling due for premature redemption during the period April 1, 2025 – September 30, 2025, along with the window available for submission of requests for premature redemption by the investors are as under:

It may, however, be noted that the above-mentioned dates may change in case of unscheduled holiday/s, the circular said. Investors are advised to take note of the period for submission of requests for redemption of SGB, in case they choose to redeem their holdings before maturity.

Rajesh Katoch, CEO, EZ Capital, said, “The redemption process is rather simple – the applicants are required to apply to their banks or authorized agents and the application should be made at least 30 days before the coupon payment date.”

“At maturity, the bonds are redeemed in Indian Rupees and the redemption price is based on the average closing price of gold of 999 purity for the three business days immediately preceding the pre-natal period. This ensures that investors get a fair price for their investment.”

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What is Sovereign Gold Bond (SGB)? Who is the issuer?

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. The Bond is issued by Reserve Bank on behalf of the Government of India.

The bonds were issued in denominations of one gram of gold and multiples thereof. The minimum investment in the bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In the case of joint holding, the limit applies to the first applicant.

The annual ceiling will include bonds subscribed under different tranches during initial issuance by the government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other financial institutions.

Will RBI issue new SGBs?

The RBI has not issued any new SGBs for the financial year 2024-25. Some experts have said that the SGB program may have ended.

How do SGBs work?

At the time of subscription, bond investors pay the issue price and receive the bonds. At the time of exit, the same investors redeem these bonds after maturity. The redemption price of SGBs is based on the average price of gold over the previous three working days. Investors can hold SGBs in physical or dematerialized form.

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Features of SGBs

These sovereign gold bonds (SGBs) are denominated in grams of gold and the minimum investment is 1 gram. SGBs are considered a safe investment. SGBs track the export-import value of gold.

SGB interest rate and maturity

SGBs carry a fixed interest rate of 2.5% per year, paid semi-annually. These bonds mature after 8 years, but a premature redemption is allowed after five years.