Savings Bonds (7.75%) – How to buy (invest) these Government of India Bonds?

Savings Bonds (7.75% interest) of the Government Of India is available.

All you need to know that before buying these bonds, I will explain in this article.

Features and Benefits of these Savings Bonds are…

Savings Bonds of Government of India features and benefits
Savings Bonds of Government of India features and benefits

These Bonds are not available from 28-05-2020. However, RBI may come up with new bonds with a lesser interest rates with same conditions.

Eligibility for Investment…

Both Individual and Huf can apply for these bonds.

However, Non-Resident Indians not allowed to buy these bonds.

These bonds can be held by

a) An Individual, not being a Non-Resident Indian

  • In her or his Individual Capacity
  • or In Individual Capacity or Joint basis or
  • In individual capacity on anyone or survivor basis or
  • or in the name of a minor as father/mother/guardian.

b) Huf also can invest in these bonds.

Mode of Application…

  • Individuals can apply online.
  • In addition, Huf can apply offline.

These bonds will be credited into investors’ bond Ledger account on the date of realization of draft/cheque or on the date of tender of cash.

Interest Payment for these savings bonds…

In cumulative bonds ( where interest and principal will be paid at maturity), the maturity value will be Rs.1,703 for every Rs.1,000 face value of a bond.

Non-cumulative bonds, the interest will be paid half-yearly from the date of the issue of the bond.

In addition, Non-Cumulative bonds do not have any compounding benefits like cumulative bonds.

Again, In non-cumulative Bonds, the interest will be paid from the date of issue up to 31st July OR 31st January as the case may be, and thereafter half-yearly for a period ending 31st July and 31st January on 1st August and 1st February.

Moreover, the interest will be credited to the investor by electronically In the form Bond Ledger account or credit to the bank account holder as per the option selected by the bondholder.

In addition, the interest payment intimation and maturity time alert also will be given 1 month before.

Moreover, Investors are not allowed to change the bond option in between one to another.

Finally, You have to claim the financial interest and maturity at the time of maturity.

If there is any delay from your end, then the government of India will not pay extra interest to you.

What is the taxation on these savings bonds ( 7.75% interest)?…

The interest received from these bonds is taxable.

However, these bonds are exempted from the wealth tax.

But the “TDS” will be deducted when the interest amount is paid.

Where to buy these Government of India savings bonds…

Investors can buy these bonds from 3 private banks and sbi and its associated banks and from some nationalized banks, and from stock holding corporation of India.

I have listed some of the bank names below.


Nomination facility in these savings bonds …

The sole holder or joint holders can nominate one or more nominees.

In addition, Non-Resident Indians also can be nominated as nominated.

However, the foreign exchange rates will be applicable at the time receiving the interest.

If the nominee dies before the bondholder, then the bondholder can make a fresh nomination.

In case, the nominee is a minor, then a guardian will be appointed to receive the money in case of his/her death.

The bondholder can change the nominee “N” number of times.

What is the term of these savings bonds of the Government of India?…

The maturity tenure for these bonds is 7 years.

However, premature withdrawal is allowed in some cases.

If the investor age is more than 60 years, and if the minimum lock-in period is over, then issuing a bank after verifying the age proof of the bondholder, can withdraw the money before maturity.

  • Lock-in period for the investors whose age is between 60 to 70 years is 6 years from the date of issue.
  • If the investor age is 70 to 80 years, then the lock-in period is  5 years from the date of issue.
  • In case investors whose age is more than 80 years, the lock-in period is 4 years.

In addition, In the case of the joint holders, if any one of the holders meets the above age conditions, the bond can be redeemed before maturity.

These savings bonds are not transferable to anyone.

In addition, the bonds will not trade in the secondary market also.

Moreover, banks will not allow these bonds as collateral to get loans.

Where to complain about these savings bonds?…

In case if you have any issue with Bank regarding this bond, then you can contact RBI directly using the below details.


Or, you can also use the below address.


Should you buy these Savings Bonds (7.75%) of the Government of India?…
Interest Rate is attractive…

Now, the bank’s fd rate is around 6% and the post office deposit rate is also less than the interest rate of these bonds.

So, if you consider the interest rate, these bonds are looking very attractive.

Sovereign Guarantee…

As these bonds are issued by the Government of India, there is no default risk.

Taxation on these savings bonds…

The interest on these bonds is taxable in the hands of the investor.

In addition, The TDS will also be deducted at the time interest payment.

So, it is wise to consider post-tax return not the pre-tax return of 7.75%.

The effective tax rate for 10% tax individuals is 6.975%, for 20% tax slab it is 6.2%, and for 30% tax slab people, the effective tax-adjusted return will be 5.425%.

However, if your income is below 2.5 lakh,  then there will be no tax on the interest (7.75%) that you receive.

Finally, I advise you to invest in these savings after comparing it with the Pradhan Mantri Vaya Vandana scheme.

Also, read an article about types of debt funds.




























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