Sovereign Gold Bonds Yield 166% in 5-Year Early Redemption
Investors who participated in the Sovereign Gold Bond (SGB) 2020-21 Series-I can anticipate a substantial payout upon early redemption. On October 28, 2025, they will receive ₹12,198 per gram, marking a significant increase of approximately 165.8% from the original issue price of ₹4,589 per gram.
Sovereign Gold Bonds and Redemption Details
The redemption value is determined based on the average closing prices of gold (999 purity) for three business days before the redemption date—October 23, 24, and 27, 2025. These prices are published by the India Bullion and Jewellers Association Ltd (IBJA).
Key Facts on Early Redemption
- Early redemption is permitted after the fifth year of issuance.
- This facility is available only on interest payment dates.
- The Series-I tranche was issued on April 28, 2020.
This signifies that investors can access their funds before the bond matures, while still benefiting from gold price fluctuations, alongside guaranteed fixed interest payments.
Catalysts for Demand and Impact on Gold Prices
The SGB scheme, initiated by the government in 2015, aims to diminish the reliance on physical gold. As of March 31, 2025, approximately 146.96 tonnes of gold, valued at around ₹72,275 crore, were mobilized across 67 tranches. By June 15, 2025, investors redeemed 18.81 tonnes.
According to Pankaj Chaudhary, the Minister of State for Finance, rising global geopolitical tensions have driven gold prices higher, consequently affecting the government’s borrowing costs linked to SGBs.
Investment Benefits
Alongside capital appreciation tied to gold prices, SGB investors earn a fixed annual interest rate of 2.5%, which is paid semi-annually. This dual benefit makes the SGB an attractive option for those seeking investment avenues that reflect gold market movements.
Investors can redeem their bonds via the bank or through the depository account where their bonds are maintained. Proceeds from the redemption will be directly credited to their accounts.
