The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond (SGB) 2020-21 Series VII at ₹14,614 per unit. This redemption is scheduled for October 19, 2026, as the following day is a holiday. Investors who purchased these bonds in October 2020 have seen their investment nearly triple in value, excluding interest and taxes.
- The redemption price is ₹14,614 per gram.
- The original issue price was ₹5,051 per gram, with a ₹50 discount for online digital payments.
- Capital gains per gram are approximately ₹9,563 excluding interest and taxes.
- The bonds carry a fixed interest rate of 2.5% per annum, payable semi-annually.
- Premature redemption is allowed after five years on interest payment dates.
What is the redemption price for SGB 2020-21 Series VII?
The RBI has fixed the premature redemption price at ₹14,614 per unit for the SGB 2020-21 Series VII. This price is based on the average gold prices on October 14, 15, and 16, 2026, which are the relevant business days for redemption.
How much did investors originally pay for these bonds?
The bonds were issued in October 2020 at ₹5,051 per gram. Investors who applied online and paid digitally received a ₹50 per gram discount, making their effective purchase price ₹5,001 per gram.
What returns can investors expect from premature redemption?
At the redemption price of ₹14,614 per unit, investors who bought at the regular price of ₹5,051 per gram would realize a capital gain of about ₹9,563 per gram. This translates to an absolute return of approximately 189.3%, excluding interest and taxes. Investors who purchased at the discounted price of ₹5,001 per gram would earn slightly higher returns.
Do Sovereign Gold Bonds pay interest?
Yes, apart from capital appreciation, Sovereign Gold Bonds offer a fixed interest rate of 2.5% per annum on the original investment amount. This interest is paid semi-annually, providing investors with regular income during the holding period.
When is premature redemption allowed under the SGB scheme?
Premature redemption is permitted after the fifth year from the date of issue, but only on interest payment dates. For the 2020-21 Series VII bonds, these dates fell on October 14, 15, and 16, 2026.
What was the subscription period for these bonds?
The subscription window for SGB 2020-21 Series VII was open from October 12 to October 16, 2020. The bonds were issued on October 20, 2020.
Investors considering Sovereign Gold Bonds should note that these figures exclude taxes and the interest earned during the holding period. The bonds offer a combination of capital gains linked to gold prices and fixed interest income, making them an attractive investment option for those seeking exposure to gold.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a registered financial advisor before making investment decisions.
