Investors in Sovereign Gold Bond (SGB) 2019-20 Series V are set to earn strong returns on premature redemption, with gains translating to about 28.44% annualised (CAGR) and over 300% absolute return in nearly 5.5 years, according to a statement by the Reserve Bank of India.
The central bank has fixed the premature redemption price at Rs 15,009 per unit, payable on April 15, 2026. The bonds were issued in October 2019 at Rs 3,738 per gram (online price), resulting in a sharp jump in value over the holding period.
Strong returns in just over 5 years
Based on the issue price and redemption value, investors are earning an absolute gain of around 302%, which translates to a yearly return of roughly 28.44% over 5.5 years.
In simple terms, an investment of Rs 1 lakh in this tranche would now be worth around Rs 4 lakh, excluding interest income.
Extra 2.5% annual interest on top
Apart from capital gains, SGB investors also receive a fixed 2.5% annual interest, paid semi-annually. This interest is over and above the price appreciation, further boosting total returns.
Why April 15, 2026 matters
As per the RBI, premature redemption of SGBs is allowed after the fifth year from the date of issue, and only on interest payment dates.
For this tranche, the next eligible redemption date falls on April 15, 2026, giving investors an exit window before maturity.
How redemption price is calculated
The redemption price is not arbitrary. It is calculated based on:
-Simple average of gold prices (999 purity)
-Prices published by the India Bullion and Jewellers Association (IBJA)
-Average taken over the last three working days before redemption
What it means for SGB investors
This tranche highlights how SGBs can deliver strong long-term returns linked to gold prices, while also providing steady interest income—something physical gold does not offer.
For investors evaluating whether to exit early or hold till maturity, the decision will depend on gold outlook, tax considerations, and individual financial goals.
Disclaimer:
This article is for informational purposes only and is based on data from the Reserve Bank of India. It should not be considered as investment advice. Returns mentioned are based on past performance and may not be indicative of future results. Investors should consult a financial advisor before making any investment decisions.