In its press release, the central bank (RBI) said, "The Government of India (GOI), vide notification F.No.4(28)-(W&M)/2017 dated May 27, 2020, hereby announces that 7.75% Savings (Taxable) Bonds, 2018 shall cease for subscription with effect from the close of banking business on Thursday, the 28th of May 2020".
Thus, one can invest in the RBI 7.75% bonds only by 28th May, 2020 end of banking business hours. These bonds are attractive as they offers higher rate of interest and higher degree of safety as compared to other banks fixed deposits and many other financial investment instruments.
However, the bonds have a long tenure with no premature withdrawal i.e. 7 years lock-in period for normal investors, whereas in case of senior citizens is as follows:
60-70 years - 6 years
70-80 years - 5 years
80 years and above - 4 years
An individual can invest as low as Rs 1,000 in these RBI taxable bonds with no maximum investment limit. An investor can opt to receive interest payments either in cumulative or non-cumulative forms.
Under Cumulative Form: Interest (Compounded half-yearly) will be payable along with the principal amount at the end of the maturity period.
Under Non-Cumulative Form: Interest will be payable at half-yearly intervals from the date of issue.
NOTE: As per RBI, interest to the holders opting for non-cumulative Bonds will be paid from the date of issue up to 31st July / 31st January as the case may be, and thereafter interest will be paid half-yearly for the period ending 31st July and 31st January.
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