In a major update for gold bond holders, the Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bonds (SGB) issued under the 2017-18 Series III. Investors who had purchased bonds in this series can now redeem them early and benefit from impressive returns of up to 211% over an 8-year holding period.
The RBI stated that the redemption price for April 16, 2025, has been set at ₹9,221 per unit. This value is calculated based on the average closing prices of 99.9% pure gold over the last three business days before redemption—i.e., April 9, 11, and 15. These prices are published by the India Bullion and Jewellers Association (IBJA).
This redemption value reflects a staggering 211% return compared to the issue price of around ₹2,963 per unit back in 2017. Importantly, this return excludes the semi-annual interest of 2.5% paid on these bonds, making the total gains even more attractive.
In its circular dated April 15, 2025, the RBI stated:
“Premature redemption of Sovereign Gold Bond 2017-18 Series III is allowed starting from the fifth year onwards, on the interest payout dates. The price is determined using the average closing price of gold for the last three business days before the redemption date.”
This ensures transparency and consistency in calculating redemption value.
SGBs come with an 8-year maturity but offer premature withdrawal from the fifth year, twice annually, aligned with interest payment dates. Investors currently have a choice:
Exit Now: Book returns of ₹9,221 per unit.
Hold Longer: Wait for the final maturity in 2025-26, though gold prices could fluctuate.
Given that gold is currently trading at an all-time high, premature redemption could be a smart move for those looking to lock in gains without waiting till maturity.
Investors opting for redemption via the RBI will be exempt from capital gains tax, but this benefit is available only to individuals and not to HUFs or companies. If the bonds are sold through stock exchanges instead, the usual capital gains tax will apply.
