The Sovereign Gold Bond (SGB) 2020-21 Series VII tranche becomes eligible for premature redemption on October 20, 2025, completing five years since issuance. The Reserve Bank of India (RBI) has fixed the redemption price at ₹12,792 per gram, based on the average IBJA gold rates from October 15–17, 2025.
Returns Overview
Originally issued at ₹5,051 per gram in October 2020, the bond now offers investors a simple absolute return of ~153%, or 2.53 times the invested capital. This calculation excludes the 2.5% annual interest, paid semi-annually, which further enhances total gains for investors who held the bond throughout its tenure.
Investor Options
SGBs have an 8-year final maturity but allow exit from the 5th year onwards on interest payment dates. Investors now face three options:
| Option | Consider If | Implication |
| Premature Redemption (Oct 2025) | Satisfied with ~2.5x gains or need liquidity | Gains are tax-free for individuals via RBI |
| Hold Until Maturity (2028) | Expect gold prices to rise further | Continue earning 2.5% annual interest plus potential price appreciation |
| Sell via Exchange at Market Price | Want flexibility without waiting for RBI window | Prices may trade at premium or discount depending on liquidity |
Program Impact and Background
Launched in 2015 to encourage savers away from physical gold, the SGB scheme has mobilized 146.96 tonnes of gold worth ₹72,275 crore across 67 tranches till March 31, 2025, according to Minister of State for Finance Pankaj Chaudhary.
As of June 15, 2025, 18.81 tonnes had been redeemed. Chaudhary also highlighted that elevated global gold prices have increased the government’s interest payouts, prompting a review of future SGB issuances considering overall borrowing costs.
Summary:
The 2020-21 Series VII SGB tranche offers investors a chance to redeem with over 150% gains, making it one of the most lucrative gold investment avenues in recent years. Investors must now weigh the choice between premature redemption, holding until maturity, or selling on exchanges, balancing liquidity needs with potential future gold appreciation.
Disclaimer:
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
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