RBI announces premature redemption price for SGB 2019-20 Series-X; should investors go redemption or wait for full term?

The Reserve Bank of India (RBI) has declared the premature redemption price for the Sovereign Gold Bond (SGB) 2019-20 Series-X. Investors holding this tranche will have the opportunity to exit early on September 11, 2025, according to the regulator’s latest notification. This series was originally available for subscription between March 2 and March 6, 2020, with bonds issued on March 11, 2020. While SGBs carry an eight-year maturity period, RBI guidelines allow investors the flexibility to redeem early after completing five years from the date of issue, provided redemptions are made on interest payout dates.

Redemption price and returns

The redemption price for the premature exit of this tranche has been fixed at Rs 10,905 per gram. This value is calculated based on the simple average of closing gold prices on September 8, 9, and 10, 2025, as published by the India Bullion and Jewellers Association (IBJA).

For perspective, the SGB 2019-20 Series-X was originally issued at Rs 4,260 per gram. The premature redemption price, therefore, represents an absolute return of around 156%, excluding the annual interest payments of 2.5% that bondholders have been receiving. In absolute rupee terms, investors will earn a gain of Rs 6,645 per gram, highlighting the twin benefits of capital appreciation and fixed interest income that SGBs provide.

Investing in SGBs

Launched in November 2015, the Sovereign Gold Bond Scheme is managed by the RBI on behalf of the Government of India. It offers investors a safe, paper-based alternative to physical gold, removing concerns around storage and purity. Beyond the appreciation in gold prices, SGBs also pay a fixed interest of 2.5% per annum, credited semi-annually. The tenure of each bond is eight years, though investors can opt for early redemption after the fifth year on coupon payment dates. SGBs are also tradable on stock exchanges, transferable, and can be pledged as collateral for loans.

How redemption works for SGBs

The RBI sets redemption prices using the simple average of the closing price of 999-purity gold over the three preceding business days. Investors looking to redeem must submit requests through their receiving offices, depositories (NSDL/CDSL), or via RBI Retail Direct. Requests are accepted starting one month before the coupon date.

To streamline exits, the RBI publishes a premature redemption calendar twice a year, in February and September. This calendar lists eligible SGB tranches for the next six months. Over the years, the RBI has already facilitated more than 130 premature redemption windows across different series.

Tax treatment and benefits

One of the standout advantages of SGBs is their tax efficiency. If held until maturity or redeemed through RBI’s official buyback windows, capital gains tax is exempt. However, if bonds are sold on stock exchanges, capital gains tax applies. Interest income, on the other hand, is taxable at the investor’s slab rate.
 Compared with alternatives such as gold ETFs or physical gold, SGBs come out ahead. Gold ETFs charge management fees, do not pay interest, and lack the tax-free maturity benefits. Physical gold, meanwhile, involves storage and purity concerns.

Should investors redeem now?

For those not facing urgent liquidity needs, experts suggest holding onto SGBs until maturity. Gold continues to act as an effective hedge against inflation and global uncertainties. Financial planners typically recommend that 10–15% of an investment portfolio be allocated to gold.

Investors who already exceed this allocation can consider partial redemption and book profits, especially given the impressive returns so far. However, in most other cases, retaining holdings until maturity provides the twin benefits of continued interest income and exemption from capital gains tax.

With fresh SGB issuances currently on hold, existing bonds have become even more valuable, offering investors a rare blend of safety, steady returns, and tax efficiency.