The Reserve Bank of India (RBI), the issuer of Sovereign Gold Bonds (SGBs), has announced the premature redemption price for certain SGB series that are due for early redemption in August 2025. This move allows investors holding these bonds to redeem them early at prevailing market-linked rates, offering them significant gains over the original issue price.
What Are Sovereign Gold Bonds (SGBs)?
SGBs are government securities denominated in grams of gold. They offer investors an alternative to physical gold by allowing them to invest in gold through bonds that pay interest and appreciate with the price of gold. The RBI issues these bonds on behalf of the Government of India.
Early Redemption Price Fixation by RBI
The RBI calculates the premature redemption price for SGBs based on the simple average of the closing price of gold of 999 purity for the last three business days preceding the redemption date. This price is published officially and serves as the benchmark for early redemption.
Why Early Redemption?
Investors may opt for early redemption of SGBs to liquidate their gold investment at current market prices without the need to sell physical gold, thereby avoiding the risks and costs associated with holding physical gold.
Do You Know?
Why Only 2019-20 and 2020-21 Sovereign Gold Bonds Are Eligible for Early Redemption in 2025
- Sovereign Gold Bonds (SGBs) come with a fixed maturity period of 8 years.
- However, early redemption is allowed only from the 5th year onwards, but only for specific series that have completed 5 years.
- That’s why, in August 2025, only the SGBs issued in 2019-20 and 2020-21 series are eligible for early redemption—because these were issued about 5 to 6 years ago.
- Newer series like 2022-23 or 2024-25 are not eligible for early redemption yet, as they have not completed the minimum 5-year holding period.
Returns on Sovereign Gold Bonds
- Apart from capital appreciation linked to gold prices, SGBs offer a fixed annual interest rate of 2.5%, paid semi-annually on the nominal value.
- These features make SGBs an attractive investment alternative to physical gold with additional yield benefits.
Recent RBI Notifications on Early Redemption
On August 8, 2025, the RBI issued an official press release announcing the early redemption price for two SGB tranches maturing on August 11, 2025:
- SGB 2019-20 Series-IX
- SGB 2020-21 Series-V
The early redemption price has been fixed at ₹10,070 per gram for both series. Source: RBI Press Release – August 8, 2025
A subsequent RBI press release on August 11, 2025, reaffirmed the redemption date and payment process for bondholders opting for premature redemption on that date. Source: RBI Press Release – August 11, 2025
Key Details for Investors
- Redemption Date: August 11, 2025
- Redemption Price: ₹10,070 per gram of gold of 999 purity
- Interest: Apart from capital gains, SGB holders earn a fixed interest of 2.5% per annum, payable semi-annually on the nominal value of the bonds. This interest is credited along with the redemption amount.
Benefits of Early Redemption
Investors opting for early redemption can liquidate their gold-linked investments without the need to sell physical gold, eliminating risks related to storage, theft, and making charges. The RBI’s market-linked redemption price ensures that bondholders benefit from prevailing gold market conditions, potentially yielding attractive returns.
What Investors Should Know
- The redemption price is strictly linked to gold market prices, providing transparency and fairness.
- Bondholders should ensure their details are updated with the respective banks or depositories to receive redemption payments without delay.
- The fixed interest payout continues to be a significant advantage of SGBs over physical gold.
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