Issued by the Government of India, RBI Bonds are one of the most secure bonds to invest in. Investors can purchase RBI Bonds from 12 nationalized banks and 4 private banks, which are HDFC Bank, ICICI Bank, IDBI Bank, Axis Bank, and Stock Holding Corporation of India Limited.
- Only an Indian citizen can invest in these bonds. A NRI Individual is not eligible.
- The investor could be an individual, joint holding or Hindu undivided family.
- One can invest in the bond in his/her name or on behalf of a minor’s name.
The maturity of an RBI Bond is 7 years. However, a return can be initiated at any time of the year along with a penalty applied to it.
If you can lock in your investment for 7 years, then investing in RBI Bonds can be a great decision. The lock in for senior citizens varies as per age. It is 6 years for investors between the age of 60 and 70 years, 5 years for 70 and 80 years, and 4 years for those above 80 years.
- The minimum investment is Rs. 1,000 and multiples of it can be invested further. The bond does not have any maximum limit.
- The interest earned is wholly taxable.
- RBI Bonds cannot be traded in the secondary market. Also, they are not eligible to be used as collateral for loans from any banking or non-banking financial institutions.
- The Bonds are issued in non-cumulative form only.
- The ownership of these bonds cannot be transferred to another person. However, in case of death of an individual, it is transferred to the nominee.
- Whether the bond is owned by an individual or is under joint ownership, all the bondholders need to file a nomination.
RBI Bonds issued by the Government of India are totally safe and secure. Despite the lock-in period being long, the bonds offer an excellent opportunity to invest in a safe place without risk. The RBI rate of interest, referred to as coupon rates is the primary highlight of this investment bond. This is because it provides zero-credit risk, also offering higher returns than FD accounts and tax-free bonds.
