The Reserve Bank of India established the premature redemption price at Rs 14,213 per unit for the Sovereign Gold Bond 2019-20 Series VI. This valuation delivers an absolute simple return of 275.51% for participants who acquired the bonds online at the original discounted rate. The total proceeds exclude the additional fixed interest of 2.50% per annum paid on the initial investment throughout the holding duration. The early redemption opportunity takes effect on October 30, 2026, coinciding with an interest payment date.
Key points
Sovereign gold bonds offer substantial wealth appreciation alongside annual interest payo…: Sovereign gold bonds offer substantial wealth appreciation alongside annual interest payouts without requiring physical storage of bullion.
Investors can exit the bond series prematurely after completing five years from the origi…: Investors can exit the bond series prematurely after completing five years from the original issue date.
The reported capital gains exclude the semi-annual 2.50 percent interest payments earned…: The reported capital gains exclude the semi-annual 2.50 percent interest payments earned during the investment period.
Sources checked by our analysis pipeline: 1
The Reserve Bank of India (RBI) has announced the premature redemption price for SGB 2019-20 Series VI - issue date October 30, 2019. According to a statement from the RBI, gold bond investors will have the option to redeem this SGB tranche prematurely on October 30, 2026.
The premature redemption of the SGB series is permitted after the fifth year from the date of the issue of such gold bonds on the date on which interest is payable, as per the statement from the RBI.
The SGB 2019-20 Series VI was issued at Rs 3,785 per gram for online purchases. It will yield an absolute simple return of over and above 275.51% ( interest deposit is not calculated) on the date of the premature redemption.
The offline issue price of the bond during this subscription was Rs 3,835. The RBI allows a discount of Rs 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode.
The absolute return is Rs 14,213 − Rs 3,785 = Rs 10,428 (without factoring…
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