The Sovereign Gold Bond (SGB) 2019–20 Series II has turned into a standout success for long-term investors. Today brings a significant development. From today, January 16, 2026, investors in this series become eligible for premature redemption. The required five-year lock-in period has officially come to an end.
The Reserve Bank of India (RBI) has declared the premature redemption price for the Sovereign Gold Bond (SGB) 2019–20 Series II, which was issued on July 16, 2019. As per the central bank’s announcement, investors can choose to redeem this tranche prematurely starting January 16, 2026. The RBI clarified that premature redemption is allowed after the completion of five years from the issue date. However, it is only on interest payment dates.
What is SGB or Sovereign Gold Bond?
Sovereign Gold Bond (SGB) is a government-supported investment option issued by the Reserve Bank of India (RBI) for the Government of India. It enables investors to gain exposure to gold without owning it in physical form. The bonds track gold prices and also provide a fixed interest return. This offers a safer and more economical alternative to purchasing physical gold.
What Is Premature Redemption for SGBs?
Although Sovereign Gold Bonds come with a standard maturity period of eight years, the Reserve Bank of India (RBI) permits investors to exit earlier after completing five years from the date of issue. However, this option is available only on RBI-notified interest payment dates.
In the case of the SGB 2019–20 Series II, issued on July 16, 2019, the first opportunity for premature redemption is available today, January 16, 2026. This window allows investors to realise their returns ahead of the bond’s full maturity.
How Rising Gold Prices Led to Massive SGB Returns
- The strong returns from this Sovereign Gold Bond are mainly driven by the sharp rise in gold prices over the past few years.
- The RBI calculates the redemption price based on the simple average of closing gold prices (999 purity) published by the India Bullion and Jewellers Association (IBJA) for the three business days before redemption.
- For the current redemption window, this calculation resulted in a redemption price of ₹14,092 per SGB unit.
- This is a significant jump from the issue price of ₹3,393 per gram paid by many investors in 2019 after the online discount.
- Overall, this reflects a capital gain of nearly 315%, excluding the fixed interest income.
- As a result, an investment of ₹1 lakh in this SGB series has grown to around ₹4.15 lakh today.
How Do SGBs Offer Extra Earnings Through Interest Income?
Sovereign Gold Bonds, or SGBs, enhance investor returns not only through the rise in gold prices but also by providing a fixed annual interest rate of 2.5% on the initial investment. This interest is paid twice a year and credited directly to the investor’s bank account. This offers a steady and dependable income throughout the holding period.
Though 2.5% might seem small on its own, its effect becomes substantial over the long term. Across five years or more, these regular interest payments add to capital gains, boosting the total returns from the investment. Unlike physical gold, which generates no periodic income and involves storage and security issues, SGBs combine price appreciation with a reliable income stream. Therefore, they make a safer and more profitable way to invest in gold. Furthermore, the predictable nature of interest payments provides investors with better financial planning and stability while their investment grows alongside gold prices.
Complete Details of SGB 2019-20 Series
What is the SGB 2019-20 Series-II Issue Price?
The Sovereign Gold Bond (SGB) 2019-20 Series-II was priced at ₹3,443 per gram for investors applying offline. Those investing online enjoyed a ₹50 per gram discount, bringing their purchase price to ₹3,393 per gram.
How Is the SGB Redemption Price Calculated?
The redemption amount is calculated using the simple average of the closing prices of 999-purity gold, as published by the India Bullion and Jewellers Association (IBJA). This covers the three working days leading up to the redemption date.
Redemption Price for SGB 2019-20 Series-II
For the premature redemption on January 16, 2026, the SGB 2019-20 Series-II is valued at ₹14,092 per unit. This price is based on the average gold rates from January 12, 13, and 14, 2026.
Returns From Premature Redemption
Investors who bought the SGB 2019-20 Series-II at ₹3,393 per gram saw a substantial gain when redeeming prematurely on January 16, 2026. The absolute return per unit was ₹10,699 (₹14,092 – ₹3,393), translating to a simple return of approximately 315.3%.
(Note: This does not include the fixed interest earned on the bond.)
Premature Redemption Gains
Investors who purchased the SGB 2019-20 Series-II at ₹3,393 per gram earned a significant profit by redeeming it early on January 16, 2026. The exact gain per unit was ₹10,699 (₹14,092 – ₹3,393), resulting in a simple return of about 315.3%.
(This calculation excludes the fixed interest earned on the bond.)
How can investors redeem SGB Today?
1. Verify your bond series: Make sure your holdings are part of the 2019-20 Series-II SGB. You can confirm this through your demat account, bank statements, or the purchase confirmation you received.
2. Submit a redemption request:
- Offline investors should request redemption at the bank or post office where they purchased the bond.
- Online/demat investors: Place the request via your trading platform or demat account.
- Submit your request before the redemption window closes to ensure smooth processing.
3. Receive your payment: After processing, the system will credit the redemption amount—calculated using current gold prices—directly to your linked bank account.
4. Monitor updates: Stay informed by checking RBI or bank notifications regarding the redemption process and payment schedule.
5. Plan your exit carefully: Premature redemption is allowed only on specific interest payment dates, so plan your timing wisely to maximise returns and avoid missing the opportunity.
Is Premature Redemption the Best Choice?
For many investors, the current early redemption window offers an excellent chance to lock in profits, particularly amid record-high gold prices. On the other hand, investors expecting gold prices to keep rising may prefer to hold the bonds until maturity to potentially earn extra interest.
FAQs
Q1. Can SGBs Be Redeemed Early?
Ans: Although the bond has an 8-year term, investors can redeem it early after the fifth year, but only on the scheduled coupon payment dates.
Q2. What if I Sell My SGB Before 5 Years?
Ans: If you redeem or rematerialise your SGB before completing five years, you will have to pay a fee of ₹150 plus 18% GST.
Q3. Can I Redeem Bonds Before Maturity?
Ans: If you choose to sell your bond before it matures, you may incur a commission, or your broker might apply a “markdown”—a percentage reduction on the sale price to cover transaction costs and earn a profit.
