The Reserve Bank of India (RBI) has announced the final redemption price for the Sovereign Gold Bond (SGB) 2017-18 Series IV at ₹12,704 per gram, payable on October 23, 2025. Investors who participated in this series, which was originally issued on October 23, 2017, at ₹2,987 per gram, will receive an impressive 325% absolute return upon maturity. This return excludes the additional 2.5% annual interest that SGB holders have been receiving throughout the bond's tenure.
The redemption price is calculated based on the simple average of the closing price of gold (999 purity) as published by the India Bullion and Jewellers Association (IBJA) for the three business days prior to the redemption date: October 17, 20, and 22, 2025. This method ensures that investors receive a fair payout that accurately reflects the current market value of gold at the time of maturity.
In rupee terms, the value gain amounts to ₹9,717 per gram, illustrating substantial long-term gains for investors who remained invested for the entire eight-year period. SGBs are automatically credited to the investor's bank account upon maturity.
In addition to the capital appreciation, SGB investors also benefit from a 2.5% annual interest, paid semi-annually on the initial investment. The final interest payout will be made along with the redemption amount. Furthermore, capital gains from SGB redemption are tax-exempt for individual investors if held until maturity, enhancing their appeal as an efficient investment option.
The RBI has also declared the premature redemption price for the Sovereign Gold Bond (SGB) 2020-21 Series VII, which was issued on October 20, 2020. Investors in this series have the option to redeem their bonds early on October 20, 2025, after completing five years of the tenure. The redemption price for this series is fixed at ₹12,792 per gram, based on the average gold price from October 15 to 17, 2025. For investors who purchased the bond at the issue price of ₹5,051 per gram, this translates to a 153% return, excluding interest. This gain amounts to approximately ₹7,741 per gram.
SGBs, introduced by the government in 2015, provide a secure, paper-based alternative to holding physical gold. They eliminate the risks associated with physical gold, such as theft, purity concerns, and making charges. The bonds are guaranteed by the RBI and the Government of India, making them a reliable investment. They are held in demat accounts, further reducing the risk of loss. Sovereign Gold Bonds offer an interest of 2.5% p.a. on the investment amount. The maturity period of SGBs is 8 years. However, premature redemption is allowed from the 5th year.
The RBI typically determines the redemption value of SGBs based on the average closing price of gold with 999 purity from the previous three trading days, as reported by the India Bullion and Jewellers Association (IBJA).
