147% Returns! RBI Confirms Premature Redemption of 2 Sovereign Gold Bonds Series; Check Details

The Reserve Bank of India (RBI) has set the premature redemption date for Sovereign Gold Bonds (SGB) 2019-20 Series-IX and 2020-21 Series-V. Investors can redeem their bonds early on August 11, at a rate of Rs 10,070 per unit. These bonds have an eight-year maturity period, but early redemption is possible after five years on interest payout dates.

Investors in the 2019-20 Series-IX, issued in September 2019 at Rs 4,070 per gram, will see a significant gain. They will earn Rs 6,000 per unit, marking a 147% increase, excluding the annual interest of 2.5%. Meanwhile, those who invested in the 2020-21 Series-V in August 2020 at Rs 5,334 per gram will receive Rs 4,736 per unit or an 89% return.

Interest and Redemption Details

SGBs offer an annual interest rate of 2.5%, credited semi-annually. Upon maturity or early redemption, investors receive the final interest payment along with the principal amount. The RBI has clarified how the redemption price is calculated for these bonds.

The RBI explained that the redemption price is determined by averaging the closing gold prices of 999 purity over three business days before redemption. This data is provided by the India Bullion and Jewellers Association Ltd (IBJA). For premature redemption on August 11, this average includes prices from August 06 to August 08.

Recent SGB Issuance

The most recent SGB issuance was Series IV for the year 2023-24, which was launched in February 2024. This follows a pattern of regular issuances aimed at providing a secure investment option linked to gold prices.

These bonds not only offer capital gains but also provide a steady income through interest payments. The combination of these benefits makes SGBs an attractive investment choice for those looking to diversify their portfolios with gold-backed securities.

The opportunity for premature redemption allows investors to benefit from favourable market conditions without waiting for full maturity. This flexibility adds to the appeal of investing in SGBs as part of a balanced financial strategy.