SGB 2019-20 Series IV redemption today at ₹15,173: ₹1 lakh investment grows to nearly ₹3.95 lakh

SGB 2019-20 Series IV investors can prematurely redeem their bonds on September 17, 2026 at ₹ 15,173 per unit, RBI said. For those who bought online at ₹ 3,840 per gram, ₹ 1 lakh invested at issue would be worth about ₹ 3.95 lakh, excluding interest.

The Reserve Bank of India (RBI) has fixed the premature redemption price of Sovereign Gold Bond (SGB) 2019-20 Series IV at ₹ 15,173 per gram for September 17, 2026. The tranche was originally issued on September 17, 2019, and investors become eligible for premature redemption after five years, subject to the scheme's redemption conditions.

The RBI calculates the redemption price using the simple average of the closing price of 999-purity gold for the three business days preceding the redemption date, as published by the India Bullion and Jewellers Association Ltd (IBJA). For this redemption window, the relevant gold prices are those for September 11, September 15 and September 16, 2026.

The SGB 2019-20 Series IV was issued at ₹ 3,890 per gram, while investors applying online and paying digitally received a ₹ 50 discount, taking the effective issue price to ₹ 3,840 per gram.

For an investor who bought the bond online, the capital appreciation can be calculated as follows.

Therefore, a ₹ 1 lakh investment at the online issue price would have purchased around 26.04 grams of gold through the SGB. At the September 17 redemption price of ₹ 15,173 per gram, those units would be worth approximately ₹ 3.95 lakh.

This calculation represents the capital appreciation alone and does not include the interest paid on the SGB.

Sovereign Gold Bonds also pay interest, unlike physical gold. Under the SGB scheme, the bonds generally carry a fixed interest rate of 2.5% per annum on the initial investment, with interest paid half-yearly.

For an investor who put ₹ 1 lakh into this tranche, the annual interest works out to ₹ 2,500 on the original investment. Over seven years, the interest would amount to about ₹ 17,500 before tax, assuming the investor received all the scheduled payments.

The ₹ 3.95 lakh figure should therefore not be interpreted as the investor's total return. It represents the value of the original ₹ 1 lakh investment based only on the issue price and the September 17, 2026 redemption price. The interest received over the holding period comes separately.

SGBs generally have an eight-year maturity, but the scheme allows premature redemption after completion of the fifth year from the date of issue. Such redemption is available on an interest-payment date. The Series IV tranche issued on September 17, 2019 therefore becomes eligible for premature redemption in September 2026.

There is also a tax point investors need to keep in mind this year. The government changed the capital-gains exemption for SGBs from April 1, 2026.