RBI Scheme: If you are looking for a secure investment option with stable returns that are not affected by stock market fluctuations, consider the ‘Floating Rate Savings Bonds’ scheme offered by the Reserve Bank of India (RBI). This scheme, backed by the Government of India, provides 100% capital security and zero risk. With attractive interest rates surpassing those of bank FDs and the government’s backing, it is a preferred choice for risk-averse investors, especially senior citizens.

What are RBI Floating Rate Savings Bonds?

– This scheme is a special savings vehicle issued by the RBI on behalf of the Government of India, where interest rates fluctuate based on market conditions.
– Issuer: Government of India (via RBI).
– Risk Category: Zero (Backed by the Government of India).
– Eligibility: Only Indian citizens and Hindu Undivided Families (HUFs) qualify to invest; NRIs are ineligible.

How is the interest rate determined?

– The interest rate on these bonds is tied to the NSC interest rate, always set at NSC rate + 0.35%.
– The government reviews and adjusts the interest rate biannually (January 1 and July 1) with interest payments made every six months directly into the investor’s bank account.
– No reinvestment option is available.

Lock-in period and withdrawal rules

– Normal Lock-in Period: 7 years.
– Senior citizen exemptions:
– Investors aged 60-70 can withdraw after 6 years.
– Investors aged 70-80 can withdraw after 5 years.
– Investors over 80 can withdraw after 4 years.

Investment limits

– Minimum investment: Rs 1000 (in multiples of Rs 1000).
– No maximum investment limit is imposed.

Tax regulations

– The interest earned on these bonds is fully taxable, added to the total income and taxed according to the individual’s income tax bracket.
– TDS is deducted by the bank/RBI if the annual interest exceeds Rs 10,000 (Rs 50,000 for senior citizens).

Where to acquire these bonds?

– These bonds can be purchased at major public sector banks (e.g., SBI, PNB), select private banks (e.g., HDFC Bank, ICICI Bank, Axis Bank), or online through their platforms.
– Bonds are digitally held with the RBI under a “Bond Ledger Account” (BLA) and cannot be transferred or pledged as collateral for loans.