SGB 2020-21 Series II premature exit on Nov 19: RBI announces issue price, investors set to receive massive gains

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The Reserve Bank of India (RBI) has announced that investors of the Sovereign Gold Bond (SGB) 2020-21 Series-II, issued on May 19, 2020, will become eligible for premature redemption on November 19, 2025.

As per the Government of India notification (F.No.4(4)-B(W&M)/2020 dated April 13, 2020), SGB holders can opt for early redemption after the fifth year from the date of issue, but only on an interest payment date. The upcoming redemption window meets this criterion.

RBI has also fixed the redemption price for this tranche at Rs 12,330 per unit. The price has been calculated based on the simple average closing price of 999-purity gold for the three business days preceding the redemption date—November 14, 17, and 18, 2025—as published by the India Bullion and Jewellers Association (IBJA).

Investors in the Sovereign Gold Bond (SGB) 2020-21 Series II are set to receive strong returns as the RBI has fixed the premature redemption price at Rs 12,330 per unit, compared to the issue price of Rs 4,540 per unit. This translates into an absolute gain of Rs 7,790 per gram, or a 171.5% return on the principal amount over five years. The gains come in addition to the semi-annual interest of 2.5% earned during the tenure, making the overall return on this tranche significantly higher than most traditional investment options.

SGBs have an 8-year tenure, but investors are allowed to exit early starting the 5th year—only on the dates when semi-annual interest is paid. Premature redemption must be initiated through the investor’s bank, post office, or agent from whom the bond was purchased, typically with a request submitted several days in advance.

SGB Scheme was introduced by the Indian government in November, 2025 as an alternative to attract gold ownership. The bonds were issued by the RBI for and on behalf of the Centre. The bonds denominated in grams of gold offered investors dual benefit-- earning a fixed annual interest of 2.5% on the issue price and earning capital appreciation linked to gold prices. The scheme majorly aimed to reduce India’s reliability on imported physical gold, curb hoarding, and channel household savings into financial assets.

The bonds have a fixed term of eight years, but investors can exit after five years on interest payment dates if they wish. SGBs can also be traded on stock exchanges, transferred to others, or used as collateral for loans.

If you want to invest in Sovereign Gold Bonds, all you need is to purchase Sovereign Gold Bond from either a bank, SHCIL or designated post offices. For offline purchases, an SGB certificate from the holding of the issuing bank or designated post offices is issued. You can collect it. In case you have purchased an SGB online, your demat account portfolio will reflect. The SGBs offer an interest of 2.5% per annum.

As per the provisions of the Income-tax Act, 1961 (Section 43 of 1961) the interest on the SGBs is taxable. When an individual redeems these bonds, they are free from paying capital gains tax. Any capital gains that result from the transfer of the bonds on the exchange will be eligible for the indexation benefits.