The Reserve Bank of India has set the premature redemption price for Sovereign Gold Bond 2020-21 Series-III at Rs 14,774 per unit. This offers investors a 219% return, turning a Rs 1 lakh investment into approximately Rs 3.19 lakh.
This announcement highlights a significant return for investors in Sovereign Gold Bonds, demonstrating their potential as a wealth-generating instrument that combines capital appreciation with fixed interest.
The Reserve Bank of India (RBI) has announced the premature redemption price for the Sovereign Gold Bond (SGB) 2020-21 Series-III, which was issued on June 16, 2019. Investors will have the option to redeem this tranche prematurely from June 16, 2026.
The premature redemption price for SGB 2020-21 Series-III on June 16, 2026, has been fixed at Rs 14,774 per unit. This price is based on the simple average of the closing price of gold of 999 purity published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days: June 11, June 12, and June 15, 2026.
The SGB 2020-21 Series-III was issued at Rs 4,627 per gram for online bond purchases, with a Rs 50 discount compared to the offline issue price of Rs 4,677 per gram. The redemption price yields an absolute simple return of 219.30% on the premature redemption date. This means an initial investment of Rs 1 lakh would grow to approximately Rs 3.19 lakh.
Sovereign Gold Bonds are government securities denominated in grams of gold, serving as an alternative to holding physical gold. They are issued by the RBI on behalf of the Government of India and are redeemed in cash upon maturity or premature redemption. These bonds also bear a fixed interest rate of 2.50% per annum on the initial investment amount, paid semi-annually.