RBI Bonds
Issued by the Government of India, RBI Bonds are one of the most secure bonds to invest in. Investors can purchase RBI Bonds from the 12 nationalized banks and 4 private banks – HDFC Bank, ICICI Bank, IDBI Bank, Axis Bank, and Stock Holding Corporation of India Limited.
Eligibility to invest in RBI Bonds
- Firstly, these bonds are open to investment by Indian citizens only. NRIs are not eligible for making investments in RBI Bonds.
- The investor could be an individual, joint holdings, and Hindu undivided family.
- One can invest in the bond in his/her name or on behalf of a minor’s name.
Broad Features of RBI Bonds
The maturity term 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. It is important to note that the lock-in period for senior citizens is relaxed. It is 6 years for investors in 60-70 years of age, 5 years for 70-80 age bracket, and 4 years for those above 80 years.
- The minimum one has to invest in an RBI Bond is INR 1000 and then it should be in its multiples. Also, there is no maximum limit for this investment.
- The interest rate earned in the 7 years is wholly taxable. As of now, the interest rate for RBI Bond is 7.15% from 1 July 2021 to 31 December 2021.
- 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 the demise of the bondholder, it is transferred to the nominee.
- Whether the bond is owned by an individual or joint ownership, all the bondholders need to file a nomination.
Why invest in RBI Bonds?
RBI Bonds issued by the Government of India are totally safe and secure for every citizen. Though the lock-in period is long, it offers an excellent opportunity to invest your money in a safe place without any risks. The RBI rates of interest, referred to as coupon rates are the primary highlight of this investment bond. This is because it provides a zero credit risk. Plus, it offers higher returns than FD accounts and tax-free bonds.
