RBI used to have this 7.75% bonds which was withdrawn recently. Now there'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'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's not in a demat account.
Income is fully taxable, TDS at 10% deducted. You can'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't trade them, you can't transfer them.
You can'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'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'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 and
https://rbidocs.rbi.org.in/rdocs/content/pdfs/GOI26062020.pdf

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'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.