Sovereign gold bonds

On September 8, 2026, the RBI paid out Rs 15,384 per gram to holders of SGB 2020-21 Series VI who chose to redeem early. Those bonds were bought in early 2021 at roughly Rs 5,000 a gram. One lakh invested had become three lakh, before counting the 2.5% annual interest along the way. If you hold Sovereign Gold Bonds today, that is the only game in town: no new tranche has been issued since February 2024, so the questions that matter are no longer “should I buy” but “when can I exit, should I, and what tax will I pay.”

Most guides on SGBs still walk you through how to subscribe, as if the next tranche is around the corner. It is not. This one is for the people who already hold the bonds.

The lock-in, stated plainly

An SGB runs for 8 years. You cannot walk up to the RBI and cash out before year 5. After the fifth year, the RBI allows premature redemption on specific dates: the half-yearly interest payment dates of your series. Miss the window and you wait six months for the next one. The RBI publishes the redemption calendar in advance; the current one covers October 2026 to March 2027, so check where your series sits in it.

The redemption price, whether at 5 years, 6, or the full 8, is the same formula: the simple average of the closing price of 999-purity gold for the three business days before the redemption date, published by the India Bullion and Jewellers Association. Nobody negotiates it. In September 2026 that formula has been landing around Rs 15,350 to 15,400 per gram.

The three ways out, ranked

The cleanest exit is the RBI window: premature redemption after year 5, or final maturity at year 8. You get the IBJA price, full stop.

The second exit is the stock exchange, since SGBs are listed on BSE and NSE. This is available from day one, but listed SGBs usually trade at a discount to the gold price, sometimes 3-5%, because buyers are few. Selling on the exchange means donating that discount to whoever buys from you.

The third option is doing nothing, which is usually right. The bond pays 1.25% of the issue price into your bank account every six months, tracks gold, and costs nothing to hold.

Should you redeem at year 5?

Ask what you will do with the money. If you want to keep owning gold, there is no reason to redeem early: hold to maturity and let the interest keep coming. If you need the cash, or you think gold has run too far, the RBI window is the right exit because it pays full value.

One more wrinkle: if you bought your SGBs on the exchange rather than in the original issue, the tax rules changed under you. Since April 1, 2026, the tax-free maturity exemption belongs to original subscribers only; secondary-market buyers pay capital gains tax. The full mechanics are in my piece on SGB tax after Budget 2026.

What I would check today

Three things. Which series you hold and its next interest date, since that is your exit window. Whether you were an original subscriber, because that decides your tax. And whether the gold you own through SGBs is still the right size in your portfolio after a three-times run: the bond has done its job, and rebalancing out of a winner is a decision, not a betrayal.

The SGB was the best gold product India ever offered retail investors, which is presumably why it had to die. If you hold one, the government’s loss is still compounding quietly in your name. There is no hurry to end that.