new Delhi. Government of India has announced the launch of Floating Rate Saving Bond 2020. These bonds will be available for subscription from July 1, 2020. These bonds are sovereign bonds and are 100 per cent safe as there is no default risk as the Government of India is giving its guarantee for them. These bonds are also known as RBI bonds. Such bonds were also available in the market earlier and used to get guaranteed interest of 7.75 percent. On May 28, 2020, the government announced the closure of these bonds. Now the government has decided to issue new savings bonds under the new series from July 1, 2020.
This time, the floating rate saving bonds will not have an interest rate fixed for 2020. The Reserve Bank of India (ABRI) will issue these bonds on behalf of the Government of India. Since these are Government of India bonds, there is no risk of default here either. Therefore, investment in them is absolutely safe. The interest on these bonds will change from time to time and the interest rate will be decided by the Government of India.
RBI bonds can be purchased by any Indian citizen in his name or joint name or in the name of a minor. These bonds can also be purchased in the name of their parents. NRIs cannot invest in these bonds.
These bonds will be available for subscription in branches of SBI or four private banks including 11 other public banks, ICICI Bank, HDFC Bank, IDBI Bank and Axis Bank. The maturity period of these bonds will be 7 years. The biggest thing is that the interest rate on these bonds will not be fixed. In earlier bonds it was decided that for 7 years, the investors used to get 7.75 percent interest.
The interest rate of these bonds will be reviewed and revised every six months. The interest of floating rate bonds is linked with the interest of the National Savings Sheet. The interest rate on National Savings Bank is currently 6.80 percent. The rate of interest on floating rate saving bonds will be 7.15 percent, which is 0.35 percent higher than NSC. Interest will be paid every six months. The first interest payment will be made on 1 January 2021.
The face value of the bond is Rs 100 and the minimum investment limit is Rs 1000. There are no maximum limits. These bonds are not transferable nor can they be sold. These bonds will be allotted in electronic form. Bond can be purchased through DD, Check, NEFT etc.
The bond can be surrendered in the 6th year before the maturity period, but the condition is that the investor should be 60 years old. For this, 50 percent of the last six months' interest will have to be paid as fee. Apart from this, no other investor can surrender them ahead of time. The interest on these bonds is taxable. That is, tax has to be paid on interest.
This post was published on June 29, 2020 8:51 pm
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