Sovereign Gold Bond 2020-21 Series-XI premature redemption date has arrived today, a big day for investors who subscribed to the government-backed gold bond in February 2021. The Reserve Bank of India (RBI) has announced the premature redemption price, allowing eligible investors to exit after completing the mandatory five-year holding period under the SGB scheme.
SGB 2020-21 Series-XI Issue Price & Subscription Details
The SGB 2020-21 Series-XI was open for subscription from February 1 to February 5, 2021, with allotment on February 9, 2021.
The Issue price of the SGB was Rs. 4,912 per gram for offline investors and Online investors who invested digitally got the same SGB at a discounted price of Rs. Rs. 4,862 per gram.
The Minimum investment in this scheme was 1 gram and the Maximum limit stood at 4 kg for individuals.
These sovereign gold bonds are government securities linked to gold prices, trade on NSE and BSE, and carry an eight-year maturity ending in 2029.
Premature Redemption Price & GoodReturns For Investors
As per RBI rules, premature redemption of SGBs is permitted after five years from the issue date, but only on interest payment dates. The first premature redemption window for SGB 2020-21 Series-XI falls on February 9, 2026.
The latest premature redemption price is based on the average closing gold price of the previous three working days, which is around Rs. 15,374 per gram.
Compared with the online issue price of Rs. 4,862 per gram, investors are receiving an absolute return of about 216%, excluding the annual interest income earned during the holding period. This massive return for investors was possible as the gold rate in india rallyes sharply inthe past five years.
SGB Interest Rate & Payment Structure
Under the Sovereign Gold Bond scheme, investors earn a fixed interest rate of 2.50% per annum on the initial investment amount, irrespective of gold price movement.
Interest is credited semi-annually to the investor’s bank account, and the final interest instalment is paid along with the principal amount at maturity or redemption.
Because of this structure, gold price appreciation plus fixed interest income make SGBs a popular long-term gold investment option in India.
Key features of the Sovereign Gold Bond scheme
The SGB scheme, issued by the RBI on behalf of the Government of India, provides a safe and cost-effective alternative to physical gold investment.
Major benefits include:
- No storage or purity concerns compared to physical gold
- Tradable on stock exchanges in demat or certificate form
- Eligible premature redemption after five years
- Guaranteed sovereign backing with fixed interest earnings
