The RBI fixed the October 19 redemption price at Rs 14,614 per unit for Sovereign Gold Bonds 2020-21 Series VII. This price gave investors a 192% return, excluding interest. The bonds got issued on October 20, 2020, at Rs 5,001 per gram. Many investors saw their original investment grow significantly today.
RBI has fixed the October 19 redemption price at Rs 14,614 per unit, giving investors in the October 2020 tranche a 192% return, excluding interest
Investors in Sovereign Gold Bonds (SGBs) 2020-21 Series VII can opt for premature redemption today (October 19), at ~14,614 per unit, as fixed by the Reserve Bank of India (RBI).
The redemption price represents an absolute return of around 192 per cent on the original investment, excluding interest.
The bonds were issued on October 20, 2020, at Rs 5,001 per gram for online subscribers. At the current redemption price, an investment of Rs 1 lakh would be worth approximately Rs 2.92 lakh, excluding interest earned during the holding period.
The redemption has been scheduled for October 19 because October 20, 2026, is a holiday.
How much have investors gained?
The return is calculated by comparing the original issue price with the redemption price.
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* Issue price: Rs 5,001 per gram
* Redemption price: Rs 14,614 per gram
* Gain: Rs 9,613 per unit
* Absolute return: 192.21 per cent
This is the total price appreciation over the holding period, not the annualised return. Interest received during the investment period must be added separately to calculate the overall return.
How is the redemption price calculated?
The RBI calculates the premature redemption price using the simple average of the closing prices of 999-purity gold published by the India Bullion and Jewellers Association (IBJA) for the three preceding working days.
For today's redemption, the calculation is based on gold prices recorded on October 14, October 15 and October 16, 2026.
Since the redemption value is linked to prevailing gold prices, returns differ across SGB tranches depending on their original issue prices and redemption dates.
What interest do SGB investors earn?
SGBs carry a fixed interest rate of 2.5 per cent per annum on the initial investment amount. Interest is paid separately from the redemption proceeds, generally in half-yearly instalments.
The interest is calculated on the original investment, while the redemption value changes with gold prices. Investors should account for both components when assessing their total returns.
Can investors redeem SGBs before maturity?
SGBs have an eight-year tenure, but investors can seek premature redemption through the RBI after completing five years from the issue date, on an eligible interest payment date.
The bonds can also be sold on stock exchanges, subject to liquidity and the prevailing market price. An exchange sale may fetch a different amount from the official RBI redemption value.
Investors should check the applicable redemption process and tax treatment before exiting. The 192 per cent return applies to this specific tranche and excludes interest and taxes; it should not be treated as an indication of future returns from gold or other SGB series.