Gold Bond Investment Turns ₹5 Lakh to ₹14.2 Lakh in 5 Years: SGB 2020-21 Series-III Redemption Details

Investors of the Sovereign Gold Bond (SGB) 2020-21 Series-III are now eligible for premature redemption due on December 16, 2025, as per RBI's announcement.  

Issued in June 2020, the bond has yielded a significant return over a 5-year period, creating strong interest around redemption details and investment outcomes. 

SGB 2020-21 Series-III Delivers 184% Absolute Return in 5 Years 

The SGB 2020-21 Series-III, issued on June 16, 2020, had an issue price of ₹4,677 per gram for physical mode and ₹4,627 for online mode with discount.  

On completing 5 years, the premature redemption price has been fixed by RBI at ₹13,152 per unit. This pricing is derived from the average closing gold price (999 purity) on December 11, December 12, and December 15, 2025. 

The absolute return from the bond now stands at ₹8,525 per gram (₹13,152 - ₹4,627), which translates to 184.3% gain without considering the interest component. 

How ₹5 Lakh Investment Became ₹14.2 Lakh 

Assuming an investor purchased 108.06 grams (₹5,00,000 ÷ ₹4,627), the redemption value after 5 years is ₹14,20,639 (108.06 × ₹13,152). This outcome excludes the biannual interest payouts totalling 2.50% annually on the initial investment. 

SGB Interest and Redemption Features 

In addition to capital appreciation, the bond pays a fixed annual interest of 2.50%, distributed semi-annually.  

The final interest is credited along with redemption amount. Investors were permitted to redeem these bonds after completion of 5 years from the date of issue, aligning with the interest payout schedule. 

Read More: RBI Fixes Premature Redemption Price for SGB 2019-20 Series VII at ₹12,827 on December 10, 2025! 

Key Features of SGB Scheme 

Managed by RBI on behalf of Government of India, the SGB scheme provides investors with an efficient way to invest in gold, avoiding purity and storage concerns.  

The bonds are denominated in grams and are issued based on IBJA’s 999 gold price average. SGBs are also tradable, transferable, and acceptable as loan collateral. 

Conclusion 

The SGB 2020-21 Series-III has reflected strong returns for investors opting for the premature redemption option after 5 years. With capital appreciation and fixed interest, the scheme offered a structured and secure mode of gold investment. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.