GoI discontinues 7.75% savings bonds

The Reserve Bank of India recently announced that the Government of India has discontinued 7.75% savings bonds.

Highlights

• The 7.75% savings bonds that are also called government bonds or RBI bons were issued in 2018. 
• They were available for the resident citizens of India alone. 
• The value of one bond was Rs 1000 and there was no maximum limit of investment. 
• The interests of the bonds were taxed under Income Tax Act, 1961.
• Apart from discontinuing savings bonds, GoI had also introduced other measures.

Other Measures

• The rates of Small Savings scheme were cut. 
• Also, the rates of PPF were cut from 7.9% to 7.1%. 
• On the Sukanya Samriddhi Yojana, the rates were cut from 8.4% to 7.6%. 
• RBI also reduced the repo rates twice after COVID-19.

Savings Bonds

• The bonds are like guarantees provided by the GoI. 
• On investing on these bonds, the GoI will return the amount with maturity at 7.75% interest rate. 
• However, due to global recession, Government has now recently stopped issuing these bonds.
• However, the move will deprive investors of the other saving options that provided high tax returns to the investors.