RBI used to have this 7.75% bonds which was withdrawn recently. Now there& #39;s a new set: 7 year locked-in bonds by the government at 7.15% (floating).

Good long term fixed income investment for the retired. (Thread)
New RBI bonds can be bought from SBI and PSU banks. Needs a few forms filled, here& #39;s the branches: (Only Individual/HUF. No NRI, Companies, LLPs can apply)
Interest is 0.35% above the National Savings Certificate (NSC) rate, and will float up and down accordingly.

Paid Jan 1, and July 1. First one will be at 7.15% (divide by 2 for the half year payment)
No upper limit, you can buy any amount.
Held in electronic form, but it& #39;s not in a demat account.
Income is fully taxable, TDS at 10% deducted. You can& #39;t self-declare like Form 15G/H: any tax deduction needs a full certification from the IT department in original.
The bonds are locked in for 7 years.
You can& #39;t trade them, you can& #39;t transfer them.
You can& #39;t take a loan against them.
If you die, your nominee will get them, but they also have to wait for maturity.
Lock in is reduced for age 80+ (4 years), 70-80 (5y) and 60-70 (6y)
There& #39;s a 0.5% brokerage paid by the government so expect these to be sold well, and expect bankers not to tell you about the lock-in clauses.
Are there better alternatives? At the near-zero risk level like the government, possibly not. With a higher risk, some pvt banks (IDFC etc) offer higher rates, as do NBFCs like Bajaj, with more liquidity. There are bonds, but those have an even higher risk.
I believe this is a useful way for some senior citizens to lock in these rates for 7 years. The lack of liquidity is a bummer, for any emergency needs and you can& #39;t even take a loan against this. Floating rates mean you get a lower rate if NSC interest rate falls.
Links: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=50009">https://www.rbi.org.in/Scripts/B... and
https://rbidocs.rbi.org.in/rdocs/content/pdfs/GOI26062020.pdf">https://rbidocs.rbi.org.in/rdocs/con...
Sub points: The rates are not locked in so the floating rate bond may be less attractive.
More attractive is PMVVY from LIC - 7.4% annual floating (Max 15L, locked 7y)
Senior Citizen& #39;s Savings Scheme: 7.4% fixed (Max 15L, kinda locked 5y liquidity with penalty) ht @kallol68
Effectively a Senior Citizen willing to lock in money:
1) SCSS: 15 lakh at 7.4% fixed
2) PMVVY : 15 lakh at 7.4% floating (with scss)
3) RBI bonds: No upper limit, 7.1% floating with NSC+0.35%
4) NSCs themselves (5y, 6.75%)
5) Do not buy bank bonds please they are toxic.
You can follow @deepakshenoy.
Tip: mention @twtextapp on a Twitter thread with the keyword “unroll” to get a link to it.

Latest Threads Unrolled: