SGB: Rs 1 lakh investment turns into Rs 3 lakh

The Reserve Bank of India (RBI) has revealed that investors in the SGB 2021-22 Series VII can redeem their bonds prematurely on November 2, 2026. The premature redemption price for each unit of this SGB series is fixed at Rs 14,167, according to the RBI's statement.

The redemption price is calculated based on the simple average closing price of 999-purity gold, as reported by the India Bullion and Jewellers Association (IBJA) for the previous three business days. The RBI determined that the average closing price for October 28, 29, and 30, 2026, was Rs 14,167 per gram.

Issued at Rs 4,715 per gram for online bonds, the SGB 2021-22 Series VII offers an absolute simple return of approximately 200.47% at the time of premature redemption. This means that a Rs 1 lakh investment in this SGB series would be worth nearly Rs 3 lakh today, not including any interest earned.

Investors who purchased SGBs of the same series offline would have faced a Rs 50 higher issue price of Rs 4,765 per gram of gold. It is important to note that SGBs are government securities denominated in grams of gold, serving as substitutes for physical gold holdings. The bonds bear a fixed interest rate of 2.50% per annum, credited semi-annually to the investor's bank account. The final interest payment, along with the principal, is made on the bond's maturity date.