Investors in the age group of 60 years and above are allowed to make premature withdrawals from RBI Savings Bonds after the end of minimum lock-in period.
The Government of India allowed to issue Floating Rate Savings Bond from July 1. The interest rate for the period July 1 to December 31, has been fixed at 7.15% which will be payable on January 1 next year. The interest rate on RBI Floating Rate Savings Bond will be reset every six months. These bonds have a maturity period of seven years. Any person who is a resident irrespective of the age can invest in these bonds, a hindu undivided undivided family can also invest. However senior citizens get special treatment as they are allowed to make premature withdrawals from the RBI Savings Bonds. Read on to know details.
Investors in the age group of 60 years and above are allowed to make premature withdrawals after the end of minimum lock-in period. Lock-in period for investors in the age bracket of 60-70 years is six years from the date of issue. Lock-in for investors in the age bracket of 70 to 80 years is five years from the date of issue and for investors aged 80 years and above, the lock-in period is four years from the issue date.
Premature withdrawal will be allowed subject to the submission of date of birth document in support of age to the satisfaction of the issuing bank.
In case of joint holders or more than two holders of bonds, any one of the holders can fulfill the eligibility criteria to make withdrawals before maturity.
There is no free lunch
There is a penalty for premature withdrawal in RBI Savings Bonds to the tune of 50% of interest due and payable for the last six months of the holding period.
RBI Savings Bonds are not tradable in the secondary market. Interest on the RBI Floating Rate Savings Bond are fully taxable and tax will be deducted while making payment of interest on bonds from time to time.
An investor can invest in bonds for a minimum sum of ₹1,000. There is no maximum limit.
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