Sovereign Gold Bonds Deliver Over 200 pc Gains as RBI Allows Early Exit

Apr 20 (BNP): The Reserve Bank of India (Reserve Bank of India) has opened a premature redemption window for Sovereign Gold Bond (SGB) 2020–21 Series VII, allowing investors to exit ahead of maturity and book significant gains.

The redemption price has been fixed at ₹15,254 per unit, calculated on the basis of the average closing price of 999-purity gold over the previous three trading sessions.

Investors who purchased at the issue price of ₹5,051 per unit are now earning returns of over 200%, excluding interest income. Those who availed the online subscription discount have recorded even higher effective gains of around 205%.

In addition to capital appreciation, SGB holders also receive 2.5% annual interest, paid semi-annually during the holding period.

The tranche, issued on October 20, 2020, has become eligible for early redemption after completing five years, as per RBI guidelines. While the scheme has an eight-year maturity period, investors are not required to hold until final redemption.

Redemption requests must be submitted through the issuing bank, post office, or SHCIL, with proceeds credited directly to registered bank accounts on the redemption date.

Tax treatment varies based on holding period and mode of purchase, with premature exits subject to applicable capital gains tax rules.

The update highlights strong investor participation and significant wealth creation through sovereign-backed gold investment instruments.