Investors of SGB 2019-20 Series X can opt for premature redemption on September 11, 2026, after the Reserve Bank of India (RBI) announced the exit window based on the scheme's rules. The early redemption is an opportunity for investors book significant gains, driven by appreciation in gold prices over six years, along with annual interest income.
The RBI has set the redemption price for this tranche at Rs 15,328 per unit. This price has been calculated as the simple average of the closing price of 999-purity gold for the three business days preceding the redemption date, as published by the India Bullion and Jewellers Association (IBJA).
As per RBI rules, premature redemption is allowed under SGB after the completion of five years from the date of issuance, on interest payment dates. This tranche was originally issued on March 11, 2020, hence eligible for exit in September 2026. Notably, the bonds have an overall maturity of eight years, investors can exit before final redemption.
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Upon redeeming SGBs on Friday, September 11, investors are expected to gain 259.8% compared with the original issue price of Rs 4,260 per unit. Investors who applied for SGBs at the time of issue benefited from a Rs 50 per gram discount, making their effective purchase price to Rs 4,210, resulting overall returns of 264%, excluding interest. Along with appreciation in bullion prices, SGB investors earn 2.5% annual interest, paid semi-annually throughout the holding period, increasing returns further.
How To Redeem SBGs?
Investors choosing for premature redemptiont must submit a request in advance at the bank branch, SHCIL office or post office where the Sovereign Gold Bond was originally purchased for the redemption process to be initiated smoothly.
Investors are informed about the maturity or redemption of their bonds at least one month in advance. On the due date, the redemption proceeds are automatically credited to the bank account that is registered with the investment records or the account currently linked to the investor. If there have been any changes in personal details—such as a bank account, mobile number or email address—investors are required to update the information with the post office, their bank, or Stock Holding Corporation of India Limited (SHCIL) to avoid delays in settlement.
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