Invested in SGB 2020-21? RBI Announces Rs 10,610 Redemption Price — Check Details Here

The Reserve Bank of India (RBI) has recently announced the redemption price for the Sovereign Gold Bond (SGB) Series issued during 2020-21.

Invested in SGB 2020-21? RBI Fixes Rs 10,610

For investors who purchased these bonds five years ago, the redemption value is set at Rs 10,610 per unit.

gold scheme SBI

This declaration has brought much excitement to SGB holders, as the returns not only reflect appreciation in gold prices but also come tax-free upon maturity.

If you are one of the investors who subscribed to the SGB scheme during the 2020-21 series.

here is everything you need to know about the redemption details, the process of receiving payments, and what this means for your portfolio.

Understanding Sovereign Gold Bonds

Sovereign Gold Bonds were introduced by the Government of India as an alternative to investing in physical gold.

Issued by the RBI, these bonds are a secure and convenient way for individuals to gain exposure to gold without worrying about storage or making charges.

Key features of SGBs include:

• Denomination in grams of gold (one bond = one gram).

• Interest of 2.5% annually, payable semi-annually.

• Redemption after 8 years with an exit option after the 5th year.

• Redemption price linked to the prevailing average market price of gold.

• No capital gains tax on redemption if held till maturity.

Redemption Price Declared: Rs 10,610

For the tranche issued in 2020-21, the RBI has fixed the redemption price at Rs 10,610 per gram.

This amount is calculated based on the simple average of closing gold prices for the last three business days, as published by the India Bullion and Jewellers Association (IBJA).

This redemption price highlights the growth in gold value over the last five years. Investors who purchased one bond in 2020 when the issue price was significantly lower, are now enjoying a strong return in addition to the 2.5% annual interest they received.

How Investors Will Receive the Redemption Amount

Investors do not need to take any manual action for redeeming their Sovereign Gold Bonds. The process is automatic and handled seamlessly by RBI in collaboration with the banks or depository participants.

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

• Interest earned previously would have already been credited semi-annually.

• Investors holding bonds in demat form can also view redemption details in their depository account.

It is important for bondholders to ensure that their bank account details and contact information are updated with their bank or the agency through which they purchased the bonds.

Why This Redemption Matters to Investors

The announced redemption price of Rs 10,610 is significant for a few reasons:

• Strong Returns: Compared to the original issue price, investors have seen excellent appreciation in their holdings.

• Tax-Free Benefits: If held till maturity, the capital gain portion of redemption is completely tax-free for investors.

• Better Than Physical Gold: Since there are no making charges, no storage costs, and no risks of theft, the effective returns are higher than physical gold purchases.

For those who are planning investments going forward, these redemption rates validate SGBs as one of the most reliable investment options for medium to long-term wealth building.

Advantages of SGBs Over Other Investments

While physical gold remains culturally significant in India, SGBs have multiple advantages:

• Hassle-free holding in electronic or certificate format.

• Regular interest of 2.5% per year in addition to gold price appreciation.

• Sovereign guarantee from the Government of India ensures security.

• No TDS applicable on redemption proceeds.

• Liquidity through secondary market trading (though with varying premiums).

Given these benefits, many financial advisors recommend allocating a portion of an individual’s portfolio to Sovereign Gold Bonds.

What Should Investors Do Next?

With the redemption already initiated, investors will see the amount reflected in their bank accounts shortly.

However, this is also a time to rethink investment strategies.

• If you remain bullish on gold, you may reinvest in fresh series of SGBs issued by the RBI.

• Alternatively, you could diversify further into equities or fixed income securities depending on your financial goals.

• For conservative investors, continuing with RBI-backed schemes such as SGBs, RBI Floating Rate Bonds, or Government Securities can provide stability.

Investors planning for long-term goals such as children’s education or retirement may still find SGBs attractive, especially given the inflation-hedging qualities of gold.

RBI’s Consistent Support for Investors

Over the years, RBI’s systematic approach in announcing redemption prices and ensuring seamless credit of maturity funds has strengthened investor trust. The central bank has always been clear about its calculation mechanism, which relies on transparent IBJA gold price data.

This consistency is one of the reasons why Sovereign Gold Bonds have become increasingly popular among Indian households seeking safe, government-backed investments that also deliver strong returns.

Final Word

For those who subscribed to Sovereign Gold Bond Series 2020-21, this redemption announcement is a rewarding closure to a five-year journey. Receiving Rs 10,610 per unit is not just a financial gain, but also a testament to the effectiveness of SGBs as an investment avenue.

Investors have successfully reaped both interest income and capital appreciation, making SGBs stand out as one of the most efficient wealth creation tools backed by the Government of India.