SGB 2020–21 Series IV premature redemption opens today; RBI shares details — should you redeem your SGB?

Representative image

• RBI allows early redemption of SGB 2020–21 Series IV at Rs 13,929 per unit
• Investors gain over Rs 9,000 per unit, about 185% price appreciation since issue
• Premature redemption allowed after 5 years, only on interest payment dates

Did our AI summary help?

The Reserve Bank of India (RBI) has announced premature redemption of Sovereign Gold Bond (SGB) 2020–21 Series IV for January 14, i.e. today. The tranche completes five years from its date of issue which makes it eligible for premature redemption.

According to Government of India notification dated April 13, 2020, premature redemption of SGBs is allowed after the fifth year from the date of issue, provided it falls on an interest payment date. The SGB 2020–21 Series IV was issued on July 14, 2020, making January 14, 2026, the eligible date for early exit.

What is the redemption price for SGB 2020-21 Series-IX series

The central bank has fixed the premature redemption price at Rs 13,929 per unit. The SGB 2020–21 Series IV was issued at a price of Rs 4,890 per unit, while online subscribers got a Rs 50 discount and paid ₹4,840 per unit.

How is the redemption price calculated

The price has been calculated based on the simple average of the closing price of gold of 999 purity for the previous three business days, as published by the India Bullion and Jewellers Association (IBJA).

Accordingly, gold prices for January 9, January 12, and January 13, 2026 were considered for arriving at the redemption value.

The redemption amount will be credited directly to the investor’s registered bank account.

How much did investors gain?

The bond was issued in July 2020 at an issue price of around Rs 4,890 per unit, while online investors paid Rs 4,840 after the discount. With the premature redemption price now fixed at Rs 13,929 per unit, investors have earned an absolute gain of over Rs 9,000 per unit, translating into a price appreciation of about 185 percent.

For instance, an investor who bought 10 units of this SGB offline for Rs48,900 would receive Rs 1,39,290 on premature redemption, making a capital gain of over Rs 90,000, excluding the additional 2.5 percent annual interest paid semi-annually during the holding period.

Should you redeem your SGB now or stay invested?

If you have a near-term financial need—such as a large expense or a better investment opportunity—premature redemption can help you lock in gains at current gold prices and get liquidity without selling in the secondary market. However, if you believe gold prices may rise further and you don’t need the money immediately, continuing to hold the bond can be rewarding. You will keep earning 2.5 percent annual interest and benefit from any further upside in gold prices.

How premature redemption works

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.

What is the Sovereign Gold Bonds scheme?

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.

How do Sovereign Gold Bonds work?

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.

What is the tax treatment of Sovereign Gold Bonds

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.