Are you a traditional investor? Do you want more than 8% returns on your investments? You have a better option. Most people invest in Bank Fixed Deposits, central government post office schemes, and even take on the risks of investing in Stock Markets and Mutual Funds.
Another risk-free investment scheme backed by the Reserve Bank of India (RBI) that guarantees returns is the RBI Floating Rate Savings Bonds (FRSBs).
The Reserve Bank issues these savings bonds on behalf of the central government. They have a lock-in period of seven years and a minimum subscription amount of Rs. 1000. There is no maximum investment limit.
RBI bonds generally offer higher interest rates than deposits in leading banks, currently at 8.05 percent. The interest rates are revised once every six months and are linked to the central government scheme, the National Savings Certificate (NSC), with an interest rate 35 basis points higher than the NSC rate. This means there’s a potential for even higher returns.
It’s important to note that, unlike other investments, RBI bonds do not have a premature withdrawal option. Senior citizens can withdraw money with a penalty after the minimum lock-in period.
Interest income from RBI bonds is taxable, and the interest rates are changed every six months, in January and July. It’s important to note that there is no tax deduction on investments in RBI bonds, ensuring you have all the information you need to make an informed decision.