RBI bond is in the news these days. The reason is its interest rate, in which the central government has not retained any change from January to June 2021, as before. Its interest rate is higher than the FD of all public and private banks. By investing in it, you can earn interest at the rate of 7.15 per cent, while all the major banks of the country pay 4 to 6 per cent interest on FD.
What is RBI Bond:
Government of India Savings Bond is called RBI Bond. It is a floating rate saving bond, in which any Indian citizen can invest. You can also invest in this bond in the name of a minor as a guardian. You can also apply for bonds jointly. The lock-in period of investment in this bond is 7 years, that is, you cannot withdraw money during this period. Although senior citizens get the option of premature exit after 4 years, there are some deductions on premature exit.
Know the buying process:
Investors can buy RBI bonds from any government bank, including State Bank or from private banks like ICICI, IDBI, HDFC or Axis. Interest is paid half yearly on this bond. One can start investing in RBI bonds with a minimum of 1000 rupees, but there is no limit for maximum investment.
This bond is allowed to be purchased in electronic form only. Investors can also buy them in cash, but their maximum limit is 20 thousand rupees. The government has announced to keep the RBI rate of interest at 7.15 per cent till June 2021, but its interest rates are reviewed every 6 months. The RBI bond has been linked with the National Savings Certificate.
Other important information:
The interest received on this bond is taxable. Tax will have to be given according to the income tax slab you will come across. Apart from this, TDS will also be applicable on interest income. It is also important for the investor to know that this bond is not transferable. Only after the death of the investor, this transfer can be done in the name of the nominee. These bonds cannot be traded in the stock market. Nor can investors take loans on these from banks, financial institutions, NBFCs etc.
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