304% returns on 2018 gold bonds as RBI clears early exit: Details here

Investors holding 2018-19 Series-II sovereign gold bonds can redeem early in October, as the RBI has fixed the price at ₹12,704 per gram

Don't want to miss the best from Business Standard?

The Reserve Bank of India (RBI) has announced a premature redemption price for the Sovereign Gold Bond (SGB) 2018-19 Series-II. Investors now have the option to redeem their holdings starting October 23, 2025, exactly seven years after the bonds were issued on October 23, 2018.

 

The redemption price has been fixed at ~12,704 per gram, marking a 304 per cent absolute return over the issue price of Rs 3,146 per gram, excluding the 2.5 per cent annual interest that SGBs pay.

How is the redemption price calculated?

The RBI determines the redemption price based on the simple average of the closing price of 999-purity gold published by the India Bullion and Jewellers Association (IBJA) for the three working days preceding the redemption date.

 

For this tranche, the price is calculated using the average closing prices on October 17, 20, and 22, 2025. The resulting redemption value per unit is ~12,704.

 

Investors who bought the bonds online in 2018 received a Rs 50 per gram discount, lowering their purchase price to Rs 3,096 per gram, pushing their absolute return to over 310 per cent.

Understanding premature redemption

Under the Government of India’s notification for the SGB scheme, investors can opt for premature redemption after the fifth year from the date of issue, but only on the interest payment dates announced by the RBI.

 

For the 2018-19 Series-II tranche, the next eligible early exit date is October 23, 2025. The SGBs have a total tenure of eight years, and investors can also choose to hold them until maturity to benefit from capital gains tax exemption on redemption.

What investors should do

 

Those planning to redeem their SGBs early should:

 

• Verify that their holdings belong to the 2018-19 Series-II tranche.
• Submit the premature redemption request well before the notified date through their bank, post office, or depository participant.

Investors who do not act will continue to earn 2.5 per cent annual interest, paid semi-annually, until final maturity in 2026.