Floating Rate Savings Bonds, 2020 (Taxable) – FRSB 2020 (T)
Government of India has announced to launch Floating Rate Savings Bonds, 2020 (Taxable) scheme commencing from July 01, 2020 to enable person resident in India/HUF to invest in a taxable bond, without any monetary ceiling. The broad features of the scheme are given below:
|1. Eligibility for Investment||The Bonds are open to investment by individuals (including Joint Holdings) and Hindu Undivided Families. NRIs are not eligible for making investments in these Bonds.|
|2. Receiving Offices||Applications for the Bonds in the form of Bond Ledger Account will be received in the designated branches of SBI, Nationalised banks, IDBI Bank Ltd, Axis Bank Ltd, HDFC Bank Ltd and ICICI Bank Ltd.|
|3. Subscription||Subscription to the bonds will be in the form of cash (upto ₹20,000/- only)/drafts/cheques or any electronic mode acceptable to the Receiving Office.|
|4. Period||The Bonds will be on tap till further notice and issued in non-cumulative form only.|
|5. Limit of investment||There will be no maximum limit for investment in the Bonds.|
|6. Form of the Bonds||The Bonds will be issued only in the electronic form and held at the credit of the holder in an account called Bond Ledger Account (BLA), opened with the Receiving Office.|
|7. Interest Rate (Floating)||The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year. The coupon on 1st January 2021 shall be paid at 7.15%. The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2021. There is no option to pay interest on cumulative basis.|
|8. Repayment/Tenor||The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue. Premature redemption shall be allowed for specified categories of senior citizens.|
|9. Tax treatment||Interest on the Bonds will be taxable under the Income-tax Act, 1961 as amended from time to time and as applicable according to the relevant tax status of the Bond holder.|
|10. Transferability||The Bonds in the form of Bond Ledger Account shall not be transferable except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds.|
|11. Tradability /Advances||The Bonds shall not be tradable in the secondary market and shall not be eligible as collateral for loans from banks, Financial Institutions and Non-Banking Financial Company (NBFC) etc.|
|12. Nomination||A sole holder or a sole surviving holder of a Bond, being an individual, can make a nomination.|
Full details of the scheme are available in the Government Notification F.No.4(10)-B(W&M)/2020 dated June 26, 2020.
Chief General Manager
Press Release: 2019-2020/2556
Reserve Bank of India
June 26, 2020
The Chairman & Managing Director
State Bank of India & 11 Nationalised Banks
Axis Bank Ltd., ICICI Bank Ltd.,
HDFC Bank Ltd., IDBI Bank Ltd.
Floating Rate Savings Bonds 2020 (Taxable)
Government of India has decided to launch Floating Rate Savings Bonds 2020 (Taxable) scheme, with effect from July 01, 2020 in terms of GoI Notification F.No.4(10)-B(W&M)/2020 dated June 26, 2020. The terms and conditions of the issuance of the Bonds shall be as per the above GOI Notification. A copy of the Circular, Government Notification and Press Release with regard to this Scheme has been placed on RBI website. The salient features of the Bond are detailed below.
1. Eligibility for Investment: The Bonds may be held by –
(i) a person resident in India,
a. in her or his individual capacity, or
b. in individual capacity on joint basis, or
c. in individual capacity on any one or survivor basis, or
d. on behalf of a minor as father/mother/legal guardian
(ii) a Hindu Undivided Family
2. Subscription – Subscription to the bonds will be in the form of cash (upto ₹20,000/- only)/drafts/cheques or any electronic mode acceptable to the Receiving Office.
3. Form of the Bonds – The Bonds will be issued only in the electronic form and held at the credit of the holder in an account called Bond Ledger Account (BLA), opened with the Receiving Office.
4. Receiving Offices – Any number of branches of State Bank of India, Nationalised Banks and four private sector banks, as specified in the Annexure 3 of the GoI Notification F.No.4(10)-B(W&M)/2020.
5. Nomination – Nomination and its cancellation shall be in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulation, 2007, published in Part III, Section 4 of the Gazette of India dated December 1, 2007.
6. Transferability – The Bonds held to the credit of Bond Ledger Account (BLA) of an investor shall not be transferable, except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds.
7. Interest (Floating) –
(i) Option – The interest on the bonds will be payable at half yearly intervals on Jan 1st and July 1st every year. There is no option to pay interest on cumulative basis.
(ii) Rate – The coupon/interest of the bond would be reset half yearly starting with Jan 1st, 2021 and thereafter every July 1st and Jan 1st. The coupon rate for first coupon period, payable on January 1, 2021 is fixed at 7.15%.
(iii) Base Rate – The coupon rate will be linked/pegged with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate.
8. Brokerage – Brokerage at the rate of 0.5% of the amount mobilized will be paid to the Receiving Offices, and they shall share at least 50% of the brokerage so received with brokers/sub brokers registered with them, on the applications tendered by them and bearing their stamp, on behalf of their clients.
9. Operational Guidelines – With a view to facilitate availability of all the operative instructions regarding servicing of these bonds at one place, consolidated operational guidelines will be issued shortly and placed on the RBI website.
10. All other terms and conditions specified in the notification of Government of India issued by the Ministry of Finance (Department of Economic Affairs) vide Notification F.No.4(2)-W&M/2018 dated March 27, 2018 shall apply to the Bonds.
(T. K. Rajan)
Chief General Manager