Investment Option for Bond Investors: A Look at a New Instrument for Indians

The 7.75% (taxable) savings bonds will be launched on January 10. Focus on the new investment instrument available for Indian citizens.

WHO CAN INVEST

* Open to investments from individuals (including condominiums) and undivided Hindu families

* NRIs are not eligible to invest in these bonds

SUBSCRIPTION

* Bond requests will be in the form of a bond ledger account

* Will be received at designated branches of bank agencies and SHCIL

PERIOD

* Will be available until further notice and issued in cumulative and non-cumulative form

ISSUE PRICE

* To be issued at par which is at Rs 100

* Will be issued for a minimum amount of Rs 1,000 (face value) and in multiples thereof

* Will be issued as a demat (Bond Ledger Account) only

INVESTMENT LIMIT

* No maximum bond investment limit

TRANSFERABILITY

* Non-transferable

* Not tradable on the secondary market

* Not eligible as collateral for loans from banking institutions, non-bank financial companies or financial institutions

NOMINATION

* Only one holder or one surviving holder of a bond, natural person, can make a nomination

MATURITY AND INTEREST RATES

* Will have a maturity of 7 years bearing interest at 7.75% per annum payable semi-annually

TAX TREATMENT

* Income Tax: Interest on the Bonds will be taxable under the applicable Income Tax Act 1961 depending on the tax status of the Bondholder

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