Sovereign gold bond premature redemption today: This issue has delivered 166% returns in 5 years

Investors in the Sovereign Gold Bond (SGB) 2020-21 Series-I will receive ₹12,198 per gram on premature redemption due on October 28, 2025, according to data released by the Reserve Bank of India (RBI). The payout represents a gain of about 165.8% over five years from the issue price of ₹4,589 per gram, excluding the 2.5% annual interest paid semi-annually under the scheme.

The redemption value has been calculated based on the simple average of closing prices of gold (999 purity) for the three business days preceding the redemption date — October 23, 24, and 27, 2025 — as published by the India Bullion and Jewellers Association Ltd (IBJA).

As per the government’s notification dated April 13, 2020, early redemption of SGBs is allowed after the fifth year from the date of issue and only on the interest payment dates. The Series-I tranche was issued on April 28, 2020, making it eligible for early encashment this October.

The option provides investors the chance to exit before maturity while earning returns linked to gold prices, in addition to the fixed interest under the SGB scheme.

Redemption can be done through the bank or depository account where the bonds are held, with proceeds credited directly to investors.

The government launched the SGB scheme in 2015 to reduce demand for physical gold. According to Minister of State for Finance Pankaj Chaudhary, the scheme mobilised about 146.96 tonnes of gold worth around ₹72,275 crore through 67 tranches till March 31, 2025. Of this, 18.81 tonnes have been redeemed by investors as of June 15, 2025.

Chaudhary noted that global geopolitical tensions have pushed gold prices sharply higher, raising the government’s borrowing costs through SGBs.