RBI sets Rs 9,688 redemption price, delivering 99.67% return on Sovereign Gold Bonds

The RBI has declared a 99.67% return on the Sovereign Gold Bonds 2020-21 Series-IV, establishing the redemption price at Rs 9,688 per unit. This valuation, applicable to premature redemptions scheduled for July 14, 2025, is calculated using the simple average of closing gold prices of 999 purity over the three business days preceding the redemption date. 

The price determination relies on data published by the India Bullion and Jewellers Association Ltd (IBJA). “The redemption price of SGB shall be based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA),” the RBI stated in a press release dated July 11, 2025.

SGBs, issued by the RBI on behalf of the Government of India, are government securities denominated in grams of gold, designed as an alternative to holding physical gold. These instruments allow investors to benefit from gold’s market value without dealing with storage or security concerns. Investors subscribe to SGBs by paying the issue price in cash, while redemption proceeds are disbursed in cash upon maturity. Additionally, SGBs offer an annual interest rate of 2.5% on the initial investment amount, paid semi-annually and credited directly to investors’ bank accounts, ensuring a steady income stream throughout the bond’s tenure.

Redemption price

The current redemption price represents a significant appreciation for investors, given that the original issue price was substantially lower. The process for premature redemption is straightforward: investors receive a one-month advance notice before the bond reaches its maturity window. Upon maturity or redemption, proceeds are credited directly to the investor’s bank account. Investors are advised to keep their account details updated with the issuing bank or institution to facilitate smooth transactions. It is crucial for investors to promptly update any changes in contact or banking details to avoid delays in receiving their funds.

SGBs as investment tools

In the broader financial landscape, SGBs remain an appealing choice for investors seeking reliable returns tied to gold prices, especially amid market volatility. The impressive return on the current series underscores the advantages of SGBs, blending the potential for capital gains with the security of a government-backed instrument. Investors should also remember the semi-annual interest payments, which enhance the total return by providing a consistent income stream. This combination makes SGBs not only a profitable investment but also a practical option for those pursuing periodic income.

SGBs as alternate to physical gold

SGBs form part of the Indian government’s strategy to curb reliance on imported gold, which significantly affects the nation’s trade balance. By promoting SGBs, the government aimed to channel savings into financial instruments that bolster economic stability while offering investors a profitable and secure alternative to physical gold. However, it has discontinued its issuance since last year.