RBI Sets Redemption Price for Premature Redemption of Sovereign Gold Bond 2020-21 Series VII
Why it matters
In accordance with the Government of India notification F.No.4(4)-B(W&M)/2020 dated October 09, 2020, the Reserve Bank of India (RBI) has enabled the premature redemption facility for the Sovereign Gold Bond (SGB) 2020-21 Series VII. This specific tranche was originally issued on October 20, 2020. The rules governing SGBs allow investors the option to redeem their holdings prematurely after a minimum holding period of five years, specifically on the dates when interest becomes payable. The scheduled interest payment and redemption window for this series is April 20, 2026.
The valuation for this redemption has been fixed at ₹15,254 per bond unit. This figure is derived from the simple average of the closing prices of gold with 999 purity for the three preceding business days, specifically April 15, April 16, and April 17, 2026. These prices are sourced from the India Bullion and Jewellers Association Ltd (IBJA). This mechanism ensures that the redemption price reflects current market valuations of gold. For investors, this provides an exit route at a premium compared to the original issue price in 2020, reflecting the appreciation in domestic gold prices over the five-year period. The RBI manages these redemptions to ensure orderly liquidity for retail investors who do not wish to hold the bonds until the full eight-year maturity.
| Parameter | Value/Date |
|---|---|
| SGB Series | 2020-21 Series VII |
| Original Issue Date | October 20, 2020 |
| Redemption Date | April 20, 2026 |
| Redemption Price | ₹15,254 per unit |
| Gold Purity Standard | 999 Purity (IBJA) |
Glossary
Term: Sovereign Gold Bond (SGB). Government securities denominated in grams of gold, issued by the RBI on behalf of the Government of India as a substitute for physical gold.
Term: IBJA. India Bullion and Jewellers Association Ltd, the body responsible for publishing daily gold rates used as benchmarks in India.