At a time when the rate of interest on bank fixed deposits (FD) is coming down, Citizens that depend on interest income or other saving instruments have the roughest time. Some those invest in equities have seen their portfolio incurring big losses and others who are invested in small savings schemes (SSS) and other fixed-income or debt products will see return declining due to falling interest rates. The Central Government has revised interest rates on small savings schemes downwards after the Reserve Bank of India reduced the policy rate. most banks are offering 5.5% TO 6.25 % for a deposit with a tenure of seven years.
SBI interest rates that Effected from 25 April 2020 mentioned in the below table
| Tenure | For General Citizen (P.A) | For Senior citizens (P.A) |
| 7 days to 45 days | 3.5% | 4% |
| 46 days to 179 days | 4.5% | 5% |
| 180 days to 210 days | 5.5% | 6% |
| 211 days to less than 12 months | 5% | 5.%% |
| 12 months to less than 24 months | 5.7% | 6.2% |
| 24 months to less than 36 months | 5.7% | 6.2% |
| 36 months to less than 60 months | 5.7% | 6.2% |
| 60 months to 120 months | 5.7% | 6.2% |
Best Investment Option.
Here is another investment option almost like Bank FD or maybe better than Bank FD, that investors may consider is the RBI 7.75 percent Savings (Taxable) Bonds, 2018. Currently, The Savings Taxable bonds issued by the govt for retail investors can emerge as an investment with a better rate of interest. Popularly referred to as RBI Bonds or GOI bonds, they suit anyone trying to find the highest safety of principal and get the best returns with the least risk
Interest rate:
The rate of interest of the bond is 7.75 percent once a year, and therefore the frequency of interest payment is either half-yearly or cumulative. Under the cumulative option, the interest is going to be paid only on maturity. For every Rs 1000 (face value) of the bond, the maturity value is Rs 1703.
Tenure:
The bonds have a hard and fast tenure of seven and Interest on cumulative bonds are going to be compounded with half-yearly rests and can be payable on maturity along with the principal.
Taxation of interest:
Interest is fully taxable as is that the case of interest from bank fixed deposits.
Premature surrender:
Premature encashment in respect of the Bonds is only allowed for individual investors who are 60 years and above. The early surrender is going to be subject to a minimum lock-in period from the date of issue as indicated below.
a. Lock-in period for investors within the age group of 60 to 70 years shall be 6 years from the date of issue.
b. Lock-in period for investors within the age group of 70 to 80 years shall be 5 years from the date of issue.
c. Lock-in period for investors within the age of 80 years and above shall be 4 years from the date of issue.
In case of joint holders or quite two holders of the Bond, the above lock-in period is going to be applicable .
albeit anybody of the holders fulfil the above conditions of eligibility.
Even after the minimum lock-in period ends, the surrender of the bonds can be done only after the 12th, 10th, and 8th half-year corresponding to the respective lock-in period. Also, the redemption payment is going to be made only on the subsequent interest payment maturity. Thus, the effective date of premature encashment for eligible investors are going to be 1st August and 1st February per annum. However, 50 percent of the interest due and payable for the last six months of the holding period are going to be recovered, both in respect of Cumulative and Non-cumulative bonds.
Transfer of bonds:
The Bonds are not transferable. And, the Bonds aren’t even tradeable within the Secondary market and aren’t eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.
Key The highlight of HDFC Bank Government of India 7.75% Savings
Taxable) Bonds 2018 · 7.75% p.a. rate of interest
· Individuals and HUF only can invest, NRI, company, Trust & charitable trust are not allowed
· 100% risk-free investment option
· No maximum limit on investment
· Tenure of the bond is 7years from the date of issue
· Choose from Half Yearly Payable interest and Cumulative interest (on maturity)
· For Half-yearly period ending 31st July/31st January interest paid on 1st August and 1st February.
· Interest in Bond will be paid, through ECS, etc. by a credit to bank a/c
· On Maturity, the amount will be credited to your Bank A/c directly. No Need to surrender Bond Certificate.
· The bonds will be exempt from Wealth-Tax under the Wealth-Tax Act, 1957.
Cheque Favouring: HDFC Bank GOI – 7.75% Savings (Taxable) Bond 2018.
KYC documents:
Attach following document along with the application form:
· PAN Card Photo Copy self-attested by the applicant.
· Aadhar Card and Address Proof Photo Copy self-attested by the applicant.
· If the application is submitted by a Power of Attorney (POA) holder then it should be submit original (POA) for verification along with an attested copy.
· If the application is on behalf of a minor, then submit the original birth certificate from the School or Municipal Authorities for date of Birth Proof.
