Gold bonds yield 109% returns

With 2.5% annual interest, a holder of SGB would make 18% average annual return from investment

- BAN KOCHUVEEDAN @ Mumbai

THE Reserve Bank has fixed the premature redemption price for the sovereign gold bond (SGB) at ₹9,600 per unit for redemption on April 28—a full 109% appreciation over the investment made in 2020-21. Last week, the retail price of the safe haven asset had crossed the psychological ₹10,000/10 grams mark.

With 2.5% annual interest, a holder of the SGB would make an 18% average annual return from the investment.

The upcoming redemption next Monday is of the SGB series I of 2020-21 and was issued on April 28, 2020.

The SGB calculates the redemption price based on the simple average of the closing gold price of 99.9 purity over the preceding three business days, as published by the India Bullion and Jewellers Association. Accordingly, the prices from April 23, 24, and 25, 2025, are considered to arrive at the final redemption figure of ₹9,600/gram.

Since the inception of the SGB scheme way back in November 2015, under the gold monetisation scheme to offer an alternative investment to physical gold, close to as much as 146.96 tonnes of gold was issued/raised through 67 tranches, amounting to Rs 72,274 crore. Since July 2024, when the tax on gold imports were slashed by 9 percentage points to 6%, the RBI has announced premature redemption for SGBs issued between 2017 and 2020.