SGB Premature Redemption Date Today: Gold Bond Turns Rs 1 Lakh Investment Into Nearly Rs 3.28 Lakh

New Delhi: Investors who purchased the Sovereign Gold Bond (SGB) 2021-22 Series VI five years ago have an important date to note. The premature redemption option for the gold bond becomes available from September 7, 2026, with the Reserve Bank of India (RBI) fixing the redemption price at Rs 15,334 per unit.

The SGB 2021-22 Series VI was originally issued on September 7, 2021, at Rs 4,682 per gram for investors who purchased the bonds online. Investors who bought the bonds offline paid Rs 4,732 per gram. The online purchase carried a Rs 50 discount.

SGB Premature Redemption Date

Under the Sovereign Gold Bond scheme, premature redemption is permitted after the completion of five years from the date of issue, subject to the redemption taking place on an interest payment date.

For the 2021-22 Series VI tranche, the five-year period is completed on September 7, 2026, making the date eligible for premature redemption.

The RBI has fixed the redemption price at Rs 15,334 per unit.

How Much Return Has the SGB Generated?

The SGB was issued at Rs 4,682 per gram for online investors and is now being redeemed at Rs 15,334 per unit.

The absolute gain per unit is:

Rs 15,334 - Rs 4,682 = Rs 10,652

This represents an absolute return of approximately 227.50%, or nearly 228%, excluding the interest earned during the holding period.

This means an investor who put Rs 1 lakh into the SGB at the original online issue price would now have a redemption value of approximately Rs 3.28 lakh.

Importantly, the Rs 3.28 lakh calculation does not include the interest received by the investor over the five-year holding period.

Rs 1 Lakh SGB Investment Becomes Rs 3.28 Lakh

At the original issue price of Rs 4,682, an investment of Rs 1 lakh represented approximately 21.36 units of the SGB.

At the redemption price of Rs 15,334 per unit, those units would be worth roughly Rs 3.28 lakh.

Therefore, the investment has more than tripled in value based purely on the gold-linked price appreciation.

The actual overall return for an investor is higher because SGBs also provide fixed interest.

SGB Interest Rate: 2.5% Per Year

Sovereign Gold Bonds carry a fixed interest rate of 2.50% per annum on the initial investment amount. The interest is paid to investors every six months.

Therefore, investors who held the Series VI bonds throughout the five-year period received interest in addition to the increase in the value of the gold-linked investment.

For an initial investment of Rs 1 lakh, the annual interest component was Rs 2,500, subject to the applicable payment schedule and tax treatment.

How Is the SGB Redemption Price Calculated?

The premature redemption value of an SGB is not based on its original issue price. Instead, it is linked to the prevailing price of gold.

According to the RBI, the redemption price is calculated using the simple average of the closing price of 999-purity gold for the three preceding business days, as published by the India Bullion and Jewellers Association Ltd (IBJA).

For the September 7, 2026 redemption, the calculation was based on gold's closing prices for:

• September 2, 2026

• September 3, 2026

• September 4, 2026

The resulting redemption price was fixed at Rs 15,334 per SGB unit.

What Is a Sovereign Gold Bond?

A Sovereign Gold Bond is a government security denominated in grams of gold. The bonds are issued by the Reserve Bank of India on behalf of the Government of India and provide investors with an alternative to holding physical gold.

Instead of purchasing and storing physical gold, investors hold the gold-linked government security and receive returns based on the applicable redemption or maturity price, along with the fixed interest component.

SGBs normally have an eight-year maturity, although investors are allowed to opt for premature redemption after the fifth year on designated interest payment dates.

Should Investors Redeem the SGB?

The decision to redeem or continue holding an SGB depends on an investor's financial objectives, view on future gold prices, liquidity requirements and tax considerations.

The September 7 redemption price provides investors with a substantial capital appreciation compared with the original issue price. However, investors who continue holding the bonds remain exposed to future movements in gold prices and can continue receiving the applicable interest until maturity.

Investors should therefore consider their individual financial circumstances before deciding whether to exit the investment.

SGB 2021-22 Series VI: Key Details

ParticularDetailsSGB Series2021-22 Series VIIssue DateSeptember 7, 2021Online Issue PriceRs 4,682 per gramOffline Issue PriceRs 4,732 per gramPremature Redemption DateSeptember 7, 2026Redemption PriceRs 15,334 per unitApprox. Absolute Return227.50%Approx. Return228%Rs 1 Lakh ValueNearly Rs 3.28 lakhAnnual Interest2.50%Interest Included in Rs 3.28 Lakh?No

Bottom Line

The SGB 2021-22 Series VI has delivered a substantial return for investors who purchased it in September 2021. With the RBI fixing the premature redemption price at Rs 15,334 per unit, the bond has generated an absolute price return of approximately 228% compared with the online issue price of Rs 4,682.

As a result, an initial Rs 1 lakh investment has grown to nearly Rs 3.28 lakh, excluding the 2.50% annual interest paid during the holding period.