RBI Sets Premature Redemption Price for Two Sovereign Gold Bond Tranches

The Reserve Bank of India (RBI) has announced the premature redemption price for two Sovereign Gold Bond (SGB) tranches, open for early exit on August 11, 2025.

• 2019-20 Series IX (issued February 2020)

• 2020-21 Series V (issued August 2020)

Both will be redeemed at ₹10,070 per gram, calculated as the simple average of closing prices for 999-purity gold over the three business days before redemption, as published by the India Bullion and Jewellers Association (IBJA).

Investor Returns

• Feb 2020 tranche: CAGR of 20%

• Aug 2020 tranche: CAGR of 13.5%
  These returns exclude the additional 2.5% annual interest (paid semi-annually), which further boosts the effective yield.

Gold’s rally over the past five years underpinned these gains. Prices climbed from ₹4,070/gm in Feb 2020 (pre-pandemic) to ₹5,334/gm in Aug 2020 amid global uncertainty and rate cuts, and have remained elevated due to inflation fears, geopolitical tensions, and central bank buying.

Redeem Now or Hold?
Experts suggest holding if you don’t need liquidity, as gold prices may rise further. Key tax advantages make SGBs especially attractive:

• Held till maturity: No capital gains tax for individuals.

• Premature redemption via RBI: Gains are tax-exempt.

• Secondary market sale: Capital gains tax applies.

• Interest income is taxable as per your slab rate.

Why SGBs Work
Issued by the RBI on behalf of the Government of India, SGBs are denominated in grams of gold, removing concerns over theft, storage, or purity. They have an 8-year maturity, with an early exit option from year five, and can also be traded on exchanges in demat or certificate form.