The ongoing redemptions follow an earlier round in February involving bonds from the 2019–20 and 2020–21 series. The pace has picked up in April, with more tranches scheduled to become eligible in the coming weeks and months.
However, the scheme itself has effectively been discontinued since 2024, with no new issuances in the past two financial years and no indication of a revival. Market experts say the programme has become a costly borrowing mechanism for the government, particularly in a high gold price environment.
Dilip Parmar of HDFC Securities said it is likely that authorities will allow existing bonds to mature or be redeemed rather than introduce fresh issuances, given the rising financial burden.
Analysts note that SGB returns are directly tied to bullion prices, which have surged significantly since 2020. Gold’s appeal as a safe-haven asset during periods of economic uncertainty has further supported this rally, boosting the value of these bonds.
While the rise in gold prices has benefited investors, it has simultaneously increased the government’s cost of servicing the scheme. As more tranches become eligible for early redemption through the next financial year, payouts are expected to continue, even as the scheme itself remains on hold.
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