RBI Sets SGB 2020-21 Series I Redemption Price at ₹15,124, Delivers Over 230% Returns in 5 Years

The Reserve Bank of India has announced the premature redemption price for Sovereign Gold Bond 2020-21 Series I. The bonds were originally issued on April 28, 2020, and investors can now opt for early redemption from April 28, 2026.

The option aligns with the rule that premature redemption is permitted after 5 years on an interest payment date. The redemption price reflects a significant increase from the original issue price.

RBI Announcement on Premature Redemption

The RBI stated that premature redemption will be available to eligible investors starting April 28, 2026. This redemption window opens exactly 5 years after the original issue date of the SGB tranche.

As per existing guidelines, early redemption is allowed only on dates when interest payments are due. The announcement applies specifically to the SGB 2020-21 Series I issuance.

Issue Price and Subscription Details

The SGB 2020-21 Series I was issued at ₹4,589 per gram for online subscriptions. Offline investors paid a higher issue price of ₹4,639 per gram, reflecting the absence of the ₹50 online discount.

The discount was offered to encourage digital participation during the issuance period. These issue prices form the base for calculating absolute returns at redemption.

Absolute Return Calculation Explained

The declared premature redemption price stands at ₹15,124 per gram. Based on the online issue price of ₹4,589, the absolute gain equals ₹10,535 per gram without considering interest income.

This translates into an approximate simple return of 230%, calculated as ₹15,124 divided by ₹4,589 multiplied by 100. The calculation excludes the additional 2.5% annual interest paid on the issue price.

Illustration of Investment Value

An investment of ₹1,00,000 made during the April 2020 issuance would now be valued at approximately ₹3,30,000. The absolute gain component alone comes to about ₹2,30,000 based on the declared redemption price.

This illustration reflects only the price appreciation of gold embedded in the bond. The cumulative interest earned at 2.5% per year is separate and not included in this calculation.

Read More: RBI Updates E‑Mandate Rules for Cards, Raises AFA Thresholds.

Conclusion

Sovereign Gold Bonds are government securities denominated in grams of gold and issued by the RBI on behalf of the Government of India. They act as an alternative to holding physical gold and are subscribed to in cash while redeemed in cash.

The minimum investment starts at 1 gram, with a maximum limit of 4,000 grams for individuals and HUFs per financial year. The RBI’s announcement highlights the structured return mechanism of SGBs through both price appreciation and fixed interest.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.