227% return on SGB premature redemption today: Gold bond turns Rs 1 lakh investment into Rs 3.27 lakh

The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond (SGB) 2021-22 Series-II-Issue date June 1, 2021. According to a statement from the Central Bank, investors will have the option to redeem this SGB tranche prematurely from Monday, June 1, 2026.

The premature redemption of the SGB series will be permitted after the fifth year from the date of issue of such gold bonds on a date on which interest is payable, as per the Reserve Bank of India (RBI) statement.

Also read: Sovereign Gold Bond investor alert: Check June 2026 premature redemption calendar and schedule

How is the SGB premature redemption price calculated?

The premature redemption value of an SGB is calculated based on the simple average closing price of 999 purity gold published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days, as per an RBI rule.

What is the premature redemption price for Sovereign Gold Bond (SGB) 2021-22 Series-II?

The premature redemption price for the Sovereign Gold Bond (SGB) 2021-22 Series-II due on June 1, 2026, has been fixed at Rs 15,672 per unit of SGB, based on the simple average of the closing price of gold for the last three business days, i.e, May 26, May 27, and May 29, 2026.

The 2021-22 Series-II was issued at Rs 4,792 per gram for online buyers. It will yield an absolute simple return of 227% on the date of premature redemption. The issue price of the bond during this subscription period for offline customers was Rs 4,842.

The absolute return comes to be Rs 15,672 -Rs 4,792 = Rs 10,880 (without factoring in the interest). In percentage terms, it is 10,880÷ 4,792 ×100 = 227.05%

Rs 1,00,000 + 227.05% of Rs 1,00,000
= Rs 1,00,000 + Rs 2,27,050
= Rs 3,27,050

Important FAQs on SGBs as per the RBI website
What is a Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The bond is issued by the RBI on behalf of the Government of India.

What is the rate of interest SGBs provide to their investors and how is it paid?
The bonds bear interest at the rate of 2.50% (fixed rate) per annum on the amount of the initial investment. Interest is credited semi-annually to the bank account of an investor and the last interest is payable on maturity along with the principal.

What are the minimum and maximum limits for SGB investment?
Sovereign gold bonds are issued in denominations of one gram of gold and in multiples thereof. The minimum investment in the bonds allowed is one gram of gold, while the maximum limit is 4 kg gold for individuals. For Hindu Undivided Family (HUF), the maximum limit is 4kg of gold, while it is 20 kg for trusts and similar entities notified.