The government has now launched a mega-saving scheme: The Floating Rate Savings Bonds 2020.
As we all know, due to COVID-19 Crisis, the rate on Savings Account and FD is decreasing every day. If you want to save your money or invest it, India’s Government has launched a new scheme for you. This scheme is known as Floating Rate Savings Bonds 2020. Let us read in detail about this scheme so you can benefit from it.
Floating Rate Savings Bonds 2020
- From 1 July 2020, the Government introduces a Taxable Savings Bonds 2020 scheme at a rate of 7.15%.
- The interest rate fluctuates every 6 months, according to RBI.
- Following the withdrawal of the taxable bonds, the Floating Rate Savings Bonds 2020 became effective on 28 May 2020, it offered a fixed interest rate of 7.75%.
In simpler words, these bonds are government debt instruments with fluctuating rates of return. These bonds will adjust their interest rates every six months while following their benchmark rates.
Now let’s look into other criteria and frequently asked questions.
#1. How to invest in Floating Rate Savings Bonds?
To invest in this new scheme, you can purchase bonds from any government bank in India. You can also buy bonds from other banks such as IDBI, HDFC, ICICI, and Axis Bank. These bonds can be purchased online.
#2. What are the ways to buy these bonds?
The bond is kept on Bond Ledger Accounts in a dematerialized format, available only for government securities with the bank. The investor would, therefore, obtain a certificate for the same. The bond can be bought in cash (Cash Limit INR 20,000). Also, you can purchase bonds by demand draft or by cheque or online.
#3. What are the Minimum and Maximum limits?
The minimum investment requirement is only INR 1,000, but there is no maximum investment limit in this scheme.
#4. What are the eligibility criteria in this scheme?
Any Indian citizen can invest in the bond. NRI’s can not make Investments in these savings bonds.
#5. What is the duration of investment in Floating Rate Savings Bonds?
These bonds have a tenor of seven years. And in exceptional circumstances, early redemption is only for older people. Investors of 60 to 70 years of age can, therefore, prematurely encash the bond after completion of six years. Similarly, after five years, investors aged between 70 and 80 can do the same. And investors aged over 80 can encash bonds in only four years.
#6. Whether these bonds tax-exempt?
No, These bonds are taxable and will be added to your income sources. And these bonds are taxable as per your tax slab.
#7. Whether these bonds transferable?
Yes, you can make a bond nomination. After the bondholder’s death, the bond is automatically transferred to the nominee. However, it can not be sold in the market or used as loan collateral.
So, this is all about the Floating Rate Savings Bonds.
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