These bonds were issued by the government of India under the Ministry of Finance on January 10, 2018, to attract the investors with a good interest rate. A special thing about this bond is that there is no maximum limit. Let’s see more what is included in this bond.
Eligibility
An individual alone or a joint basis or on a survivor basis.
A Hindu undivided family (HUF)
On behalf of the minor to father/mother/legal guardian
NRI’s are not eligible for these bonds.
Investment limit: The minimum investment amount is 1000 and there is no maximum limit.
Issue price: The bonds will be issued at par i.e. at Rs 100. The bonds will be issued for a minimum price of Rs 1000 (face value) and in multiples thereof. The issue price will be Rs 1000 for every Rs 1000 face value.
How to apply for Bond?
Application for the bond made either in a physical or electronic form clearly mentioning the name, address with valid proof.
The payment in the form of cash/draft/cheque/electronic mode must be accompanied with the application.
Cheque/drafts must be issued in favor of the issuing office.
Applicants who already got exemption in income tax under the relevant section must present a declaration along with the form or submit the certificate obtained from the tax authorities.
Bonds issuance:
Bonds will be issued in the form of Demat form and credited to the Bond Ledger Account (BLA) of the investor on the date of cash receiving or on the date of realization of the cheque/draft.
Bond Ledger Account will be opened with the issuing bank and the bonds issued for the credit of BLA will be held by any number of branches of bank or SHCIL (Stock Holding Corporation of India Ltd).
A certificate of holding will be issued to the holder for the bonds held to the credit in BLA.
Receiving offices or where you can have these taxable bonds.
Any number of branches of Nationalized banks, three private banks (HDFC, ICICI, Axis), Stock holding corporation of India (SHCIL).
Branches of any other bank as specified at that time.
Nomination:
An individual holder or all the joint holders can nominate as individual to one or more persons who in case of death of the sole holder or joint holders will be entitled to the bonds and to the payment due thereon, provided the person is competent to hold the bond.
Where the nomination has been made in favor of two or more nominees and either or any of them dies before such payment becomes due, the title to the Bonds shall vest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly.
In the event of nominee/nominees predeceasing the holder than the holder can make the fresh application of the nominee.
Separate nominations can be made for each bond.
Nomination can not be made for the bonds issued against minors.
Nomination can be changed by the holder at any time and can be canceled by producing the application to the receiving office.
If the nominee is a minor, the holder of Bonds may appoint any person to receive the Bonds/ amount due in the event of his / her / their death during the period the nominee is a minor.
Interest:
The Bonds will be issued in ‘Cumulative’ or ‘Non-cumulative’ form, at the option of investor and will bear interest at the rate of 7.75% per annum.
Interest in non-cumulative Bonds will be payable at half-yearly intervals from the date of issue and interest on cumulative Bonds will be compounded with half-yearly rests and will be payable on maturity along with the principal.
In the latter case, the maturity value of the Bonds shall be ` 1,703.00 (being principal and interest) for every ` 1,000/-(Nominal).
Interest to the holders opting for non-cumulative Bonds will be paid from the date of issue in terms of paragraph 7 above up to 31st July / 31st January as the case may be, and thereafter half-yearly for the period ending 31st July and 31st January on 1st August and 1st February.
Interest in Bonds held to the credit of Bonds Ledger Account of an investor will be paid, electronically by a credit to the bank account of the holder as per the option exercised by the investor/ holder.
Taxation:
1. Tax will be deducted at the source for non-cumulative bonds while payment of interest and credited to the government account from time to time.
2. Tax will be deducted on the interest portion of the maturity value on the cumulative bonds and credited to the govt account.
3. Tax will not be deducted if the applicant had made a declaration in the application form that they have obtained tax exemption under the relevant provision of income tax and they have submitted the true copy of a certificate from the tax authorities.
Advances and trade against bonds:
these bonds are not to use in the secondary trade market also these bonds can’t be taken as collateral for loans from the banks, financial institutions, and non-banking financial companies.
Repayment:
The bonds are repayable on the expiration of 7 years from the date of issue.
Premature encashment of the bond is allowed for the individual investor in the age group of 60 years upon submission of producing the relevant birth documents under certain lock-in conditions.
Lock-in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.
Lock-in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.
Lock-in period for investors at the age of 80 years and above shall be 4 years from the date of issue.
In the case of a joint holder or more than two holders of the bond, the lock-in period will be applicable if anyone fulfills the above condition of age.
After aforesaid minimum lock-in period from the date of issue, an eligible investor can surrender the bonds at any time after the 12th, 10th, and 8th half-year corresponding to the respective lock-in period but redemption payment will be made on the following interest payment due date. Thus, the effective date of premature encashment for eligible investors will be 1st August and 1st February every year. However, 50% of interest due and payable for the last six months of the holding period will be recovered in such cases, both in respect of Cumulative and Non-cumulative bonds.
Transferability: The bonds held to the credit of BLA shall not be transferrable.
Brokerage: a brokerage at the rate of Rs1 per Rs 100 will be paid to the agent registered with the respective receiving office on the applications submitted on their behalf with their stamp on the application.
Note: For the forms download you can visit Reserve Bank of India website also download forms here
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