RBI announces premature redemption for two SGB series on April 23

The Reserve Bank of India (RBI) has confirmed the premature redemption for two specific tranches of the Sovereign Gold Bond (SGB) Scheme, taking place today, April 23, 2025. This redemption applies to Series IV of 2017-18 and Series II of 2018-19, which were issued on the 23rd of October in their respective years.

According to the scheme's guidelines, investors are eligible to opt for a premature redemption option after a minimum holding period of five years, exclusively on the interest payout dates that occur semi-annually. These bonds are government securities denominated in grams of gold, providing the dual benefit of a fixed annual interest rate of 2.5%, payable semi-annually, and the potential appreciation in gold's market value at maturity.

Investors wishing to exit these bonds before the full eight-year maturity can choose between selling in the secondary market or opting for the RBI's scheduled early redemption process. Redemption can be processed through multiple channels, including banks, post offices, or stock exchanges, contingent upon where these bonds are held.

Financial advisors suggest that investors check with their bank or depository participant ahead of the redemption dates to ensure a smooth transaction. Notably, while the Union Budget 2025 has halted new issuances of SGB, the existing bonds will remain active until they mature or are redeemed on eligible early exit dates.

The redemption price for these bonds has been set at Rs 9,669 per unit. This figure is derived from the simple average of the closing prices of gold with 999 purity as published by the India Bullion and Jewellers Association (IBJA) over the last three working days — namely, April 17, 21, and 22. Such a method ensures that the redemption value reflects a realistic market price, providing an equitable exit for investors opting for premature redemption. 

The SGB 2017-18 Series III, issued on October 16, 2017, at Rs 2,964 per unit, was redeemed on April 16, 2025, at a price of Rs 9,221 per unit. The redemption price was determined based on the simple average of the closing price of 999 purity gold for three business days: April 09, April 11, and April 15, 2025, as published by the India Bullion and Jewellers Association Ltd.

Similarly, the SGB 2019-20 Series V, issued on October 15, 2019, at Rs 3,788 per unit, was prematurely redeemed on April 15, 2025, at a price of Rs 9,069 per unit. This redemption price was also calculated based on the simple average of the closing price of 999 purity gold for three business days: April 08, April 09, and April 11, 2025.

Investors in both the SGB 2017-18 Series III and SGB 2019-20 Series V have experienced significant capital gains, attributed to the strong performance of gold amidst geopolitical and macroeconomic uncertainties.

In the broader context of the investment landscape, the decision to allow premature redemption is significant given the recent cessation of new SGB issuances. The SGB scheme has been a popular choice among investors looking for a safe investment with returns linked to gold prices, amidst volatile market conditions. With a fixed interest payout and gold price appreciation, the scheme offers a balanced approach to wealth preservation, particularly in uncertain economic times.

Across the sector, this move by the RBI aligns with investor expectations to provide liquidity and flexibility in investment strategies. Despite the discontinuation of new issues, the existing SGBs continue to offer an attractive proposition compared to competing investment products. For instance, Axis Nifty's various index funds have showcased strong returns but come with different risk profiles. As the market dynamics evolve, SGBs remain a unique asset class blending security with potential growth linked to gold prices.