Gold bonanza: RBI sets redemption price for 2019-20 Series-III at Rs 9,991; check details

Investors holding the Sovereign Gold Bond (SGB) 2019-20 Series-III are set to receive Rs 9,991 per unit on Thursday, August 14, reflecting an impressive gain of approximately 185% over the original issue price of Rs 3,499 per gram. This return is exclusive of the annual 2.5% interest paid to bondholders.

The Reserve Bank of India (RBI) had pre-announced the redemption price on August 13, and payments will be credited to investors who opted for premature redemption. Investors who did not apply for early redemption will have to wait until the next scheduled interest payout date.

Under the rules governing SGBs, premature redemption is permitted only after the fifth year from the bond’s issuance and must coincide with an interest payment date. This particular tranche was originally issued on August 14, 2019. The redemption price was calculated based on the simple average of the closing gold prices of 999 purity recorded over the three preceding business days—August 11, 12, and 13, 2025—according to data from the India Bullion and Jewellers Association Ltd (IBJA).

Performance of other series

The RBI also set the premature redemption price for the 2019-20 Series IX at Rs 10,070 per gram, giving investors a total profit of ₹6,000 per unit, or 147% over five years. This translates to a compounded annual growth rate (CAGR) of roughly 20%. The issue price for this series had been fixed at Rs 4,070 per gram in September 2019. Notably, this gain reflects only the increase in gold prices and does not include the annual 2.5% interest payment.

Similarly, the 2020-21 Series V, issued in August 2020, is also eligible for early redemption. Investors in this series have earned an approximate total return of 89%, corresponding to a CAGR of 13.5%, amounting to a gain of Rs 4,736 per unit over the issue price of ₹5,334 per gram.

Redemption Trends

Over the past five years, multiple SGB tranches have either matured or become available for early redemption. Between April and September 2024, 26 series—including tranches from the 2016-17, 2017-18, and 2018-19 fiscal years—were offered for premature redemption. In the April–September 2025 cycle, 33 series are scheduled for early redemption, covering tranches issued from 2017-18 through 2020-21. Earlier series, such as the November 2015 tranche, have fully matured, with investors having received their final payouts.

The SGB Scheme and Its Impact

Launched in 2015, the Sovereign Gold Bond scheme was designed to reduce reliance on physical gold and mobilize financial resources for the government. According to Minister of State for Finance Pankaj Chaudhary, the program has attracted approximately 146.96 tonnes of gold, worth about Rs 72,275 crore, through 67 tranches as of March 31, 2025. Out of this, investors have redeemed 18.81 tonnes of gold by June 15, 2025.

Chaudhary highlighted that global geopolitical tensions have driven gold prices sharply higher, resulting in increased borrowing costs for the government through SGBs. He noted that future tranches of the scheme will be evaluated carefully, considering cost implications, as part of broader debt management strategies, which also include government securities and treasury bills.

The SGB scheme continues to offer investors an opportunity to gain from gold price appreciation while earning fixed interest, providing a safe alternative to holding physical gold and helping the government manage its financial liabilities efficiently.