The Reserve Bank of India will stop issuing 7.75 per cent Savings (Taxable) Bonds from Friday (May 29). The government has announced the withdrawal of the scheme from the close of banking business on Thursday due to declining interest rates, it said in a notification on Wednesday. "The Government of India, hereby notifies that the 7.75 per cent Savings (Taxable) Bonds, 2018...shall cease for subscription with effect from the close of banking business on Thursday, the 28th of May, 2020," said in a one-sentence notification on Wednesday.
What is the Savings (Taxable) bonds, 2018?
The scheme, commonly known as RBI Bonds or GOI bonds, is popular among retail investors who looked for the safety of principal and a regular income. NRIs, however, were not eligible for making investments in these bonds.
The Reserve Bank of India has notified the Cessation of 7.75 per cent Savings (Taxable) Bonds, 2018. Interest on the Bonds is taxable.
The Bonds are issued at par at Rs 100. The minimum subscription was fixed at Rs 1,000. The Savings (Taxable) Bonds have a lock-in period of 7 years.
As per the scheme, the Bonds are repayable on the expiration of seven years from the date of issue.
The interest rate on bank fixed deposits as well as lending rates are on the decline with the Reserve Bank of India lowering the key short-term lending (repo) rate. The repo rate is currently at a historic low of 4 per cent.
(With PTI inputs)