RBI Bonds
RBI Bonds are secure investment options issued by the Reserve Bank of India, offering a reliable way to earn fixed returns. These bonds are designed for investors seeking a safe and stable investment with guaranteed interest payments. Ideal for risk-averse individuals, RBI Bonds provide an attractive alternative to traditional savings instruments, combining safety with decent returns.
Features of RBI Bonds
Security - Very safe, Sovereign guarantee by Indian government (government is responsible for honoring the bond's payments)
Floating Interest Rate: The coupon rate (Interest rate) would be reset on every 1st of January and 1st of July. The investor will get his coupon rate (Interest rate) reset irrespective of his entry time coupon rate (Interest rate). The current interest rate is 8.05% up to 30th June 2024.
Nomination Facility: Investors have an option to nominate a beneficiary who will receive the investment proceeds in the event of the investor's death.
Investment Limit: a minimum investment amount, currently ₹1,000 (would vary depending on the bond series).
RBI Bond Details
Category of Investor - Resident Indian and Hindu Undivided Family (HUF). NRI's are not allowed to invest.
Limit of Investment - Minimum: ₹1,000 and in multiples of ₹1000. No Maximum limit
Date of Issuance of bonds - Date of receipt of subscription in cash (up to ₹20000 only), or date of realization of cheque / draft / funds.
Forms of bonds - Electronic form held in the Bond Ledger Account. A Bond Ledger Account will be opened by the Receiving Office in the name of investors.
Interest payment - Half-yearly
Post maturity interest - Post Maturity Interest is not payable.
Taxation - Income from the bonds is taxable. TDS applicable for interest.
Nomination Facility - The sole holder or all the joint holders may nominate one or more people.
Maturity Period - 7 years from the date of issuance.
Premature redemption - Facility is available to the eligible investors after lock in period of 4, 5 and 6 years in the age bracket of 80 years and above, between 70 to 80 years and 60 to 70 years respectively. (Penalty charges @ 50% of last coupon payment.)
Transferability - The bonds are not transferable. Transferability is limited to nominee(s) / legal heir in case of death of holder.
Tradability / Advances - The bonds are not tradable in the secondary market and not eligible as collateral for availing loans.