The Reserve Bank of India (RBI) announced a premature‐redemption price of ₹12,198 per unit for the Sovereign Gold Bond 2020‑21 Series I issued on October 28, 2020.
The redemption figure is based on the simple average of the closing price of gold of 999‐purity for the business days of October 23, 24 and 27.
When issued, the bond’s subscription price was either ₹4,589 per gram for online purchasers or ₹4,639 per gram for offline buyers.
With the current payout, investors who bought online have realised an absolute return of nearly 166 per cent (excluding interest earned over the period).
Under the scheme rules, premature redemption is permitted once five years have passed from the date of issue, on the date when interest is payable.
The SGB scheme was introduced by the Government of India as an alternative to holding physical gold, allowing investors to benefit from gold‐price appreciation, a fixed annual interest rate, avoidance of storage and purity issues, and potential tax advantages.
