RBI BOND 7.15% Floating Rate Savings Bonds 2020

by | Jun 27, 2020 | Investments, Top Global News

The Govt of India RBI BONDS 7.75% Govt Savings Bonds, which ceased for subscription on May 28, 2020.

Now The Central Govt has decided to replace 7.75% Bonds with new RBI Floating Rate Savings Bonds 2020 (Taxable) scheme. These bonds will be issued by the RBI and open for subscription from 1st July 2020. The  floating-rate bonds have variable interest rates that adjust periodically.

For the last couple of years or so, the Savings Bonds (Taxable) have been one of the preferred investment options by many retirees, senior citizens and for those who are looking for fixed / regular income.

RBI Floating Rate Savings Bonds 2020

Below are the salient features of RBI’s new Savings Bonds;

Maturity Period 7 years (lock-in period)
Rate of Interest 7.15% from 1-July-2020.
Will be re-set every 6 months.
Benchmark for Reset Prevailing NSC Rate + 0.35%
Risk Attached Low Risk
Minimum Investment Rs 1,000
Maximum Investment No Limit
Tax Treatment Interest amount is taxable
Tax Benefit Available? No

New RBI Floating Rate Savings Bonds 2020 Scheme Features

  • Who issues these Bonds?
    • These Bonds are being issued by the RBI on behalf of the Govt of India.
  • Who can buy RBI Savings Bonds?
    1. An individual, not being a Non-Resident Indian –
      • (a) in his or her individual capacity, (or)
      • (b) in individual capacity on joint basis, (or)
      • (c) in individual capacity on anyone or survivor basis, (or)
      • (d) on behalf of a minor as father/mother/legal guardian
    2.  a Hindu Undivided Family.
  • Can NRIs invest in these RBI Bonds? – No
  • Where / How to buy Govt of India Savings Bonds?
  •  One can buy these bonds from State Bank of India, other nationalized banks and some private sector banks such as HDFC Bank and ICICI Bank.
  • Demat Provider (Open Demat Account in 10 minutes)
  • Also can buy from Authorised Agent of RBI.
  • You can also write us if you want to invest
  • What are the Interest payment options?
    • The bond will be issued in non-cumulative form only.
    • The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year.
    • The coupon on 1st July 2020 shall be paid at 7.15%. As these are Floating rate bonds, the interest rate will be re-set periodically (six months).
    • The prevailing NSC rate is 6.8%. So, the bonds will initially be issued with 7.15% rate (6.8%+0.35%).
    • The Bonds shall be repayable on the expiry of 7 (Seven) years from the date of issue. No interest would accrue after the maturity of the Bond.
  • What are the Tax implications on RBI Floating Rate Savings Bonds?
    • The interest income is taxable as per your income tax slab rate.
    • There are no tax benefits available on the invested amount.
    • Tax deducted at source (TDS) will be applicable if interest from this instrument earned is more than Rs 10,000 in a financial year.
  • Is pre-mature withdrawal possible?
    • Premature redemption shall be allowed for specified categories of senior citizens.
  • The Bonds will be issued in Demat form only (Bond Ledger Account).
  • The Bonds are not be transferable. Also, these are not tradeable in the secondary market.
  • These bonds are not eligible as collateral for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC) etc.

Should you invest in RBI Floating Rate Savings Bonds 2020?

  • If you are a senior citizen and looking for a periodic / secured income option (do note that interest income will not remain fixed), this is a decent choice. But, do note that Senior Citizen Savings Scheme currently offers better interest rate and you can also have a look at another option i.e, new Pradhan Mantri Vaya Vandana Yojana (PMVVY).
  • If you are not a senior citizen but looking for a ‘secured income’ option with a time-frame of around 7 years, you can consider saving some portion of your investible surplus in this Bond Scheme. Currently the bank FDs and time deposits offer interest rates of around 6% for a tenure of 5+ years.
  • Kindly note that interest income on Savings Bonds is taxable (so post-tax yield can be low) and lack of liquidity can be a major draw-back.
    • Post-tax returns = Pre-Tax returns * { (100-Tax Rate) / 100 }

I have shared videos for Senior Citizen Investments option pls view Video for more clarity.

How can I convert physical SGB Sovereign Gold Bond/Shares to DEMAT Account ?

by | Jun 26, 2020 | Investments

My personal Experience regarding Holding of Gold Bond.
Maximum Senior Citizens Purchase Gold Bond from Bank and keep hard copy in file and we found that lot of time paper misplaced or unable to cash it whenever requirements.

Basically, The customers will be issued Certificate of Holding on the date of issuance of the SGB. Certificate of Holding can be collected from the issuing banks/SHCIL offices/Post Offices/agents or obtained directly from RBI on email, if email address is provided in the application form.
Maximum chances Email Id and paper based bond get damage or misplaced.

My Recommendation
Always open DEMAT Account (Click Here to Open DEMAT Account) and hold all Shares/ Bonds in DEMAT. As its very easy to sale or purchase.

As per the notification issued by SEBI on 8 June 2018, SEBI is aiming for 100% dematerialization of shares within the target date of 5 December 2018. This means all existing physical shares will be required to be converted into dematerialized form on or before 5 December 2018. Post 5 December 2018, transfer of physical shares will not be permitted, with the exception of the share certificates held under a legal will.


Step-by-step procedure to convert physical shares to Demat:

Holders of share certificates in the physical form can quickly get their shares converted into dematerialised form by following some simple steps as given below:

Step 1: The opening of a Demat Account

This is the most essential and the very first step required to convert share certificates into dematerialised form as you will need a Demat account to hold your share/shares.

Find below steps to open a Demat Account

1. Contact a Depository Participant who is registered with SEBI
2. Fill an account opening form Online.
3. Submit your KYC documents along with a filled application form to your DP online
4. Sign an agreement along with a schedule of charges with the DP/bank. This agreement will provide and mention the responsibilities and the rights of both the account user and the DP
5. You will then be provided with a Demat account number, using which you can start trading in the stock markets with your Demat account

Step 2: Process of transferring physical shares into dematerialised form

1. Contact your DP for a DRF Form, which is also known as a Dematerialization Request Form
2. Fill up the DRF form and submit the same to your DP along with your share/SGB certificates (On each share certificate, ‘Surrendered for Dematerialisation’ needs to be mentioned)
3. Within two to three weeks, subject to successful verification of the DRF form submitted, and authentication of your share certificates, you will receive an electronic request, and your physical shares will be converted into dematerialised form and transferred to your Demat account

Step 3: Dispose off physical share/SGB certificates

The physical share certificates can now be destroyed as you will no longer need to safeguard them

You can now easily sell or transfer your shares in Demat form in a matter of seconds, which was not possible with physical share certificates.

Disadvantages of Using Physical Share Certificate for Trading of Shares

Some of the disadvantages of trading or holding shares using physical share certificates are listed below:

  1. Need to be stored safely and securely under lock and key as physical share certificates are exposed to the risk of theft and loss. share certificates can also suffer from wear and tear damages etc.
  2. Transactions using physical share certificate are time-consuming and tedious involving multiple steps which need to be undertaken, whereas transaction of shares in Dematerialised form can be completed in a matter of seconds
  3. Any transaction involving physical share certificate attracts stamp duty payments whereas share transaction using dematerialised shares do not attract any stamp duty payment/liability/expenses


How to Surrender LIC Policy ?

by | Jun 24, 2020 | Insurance, Life Insurance

The LIC (Life Insurance Company) as it’s one of the best insurance companies in India. This company allows you to surrender the LIC policy.

If you are looking for a step by step guide on how to surrender LIC policy then you are at the right place.

Here is a step by step guide on how to surrender LIC policy:

What is policy surrender?

When you surrender a policy, it means that you are discontinuing and breaking the insurance policy bond or contact with the firm. It means that after surrendering, you won’t get any insurance in case of an accident. You will get only 30% of the premiums paid and it also has some conditions.

There’s a surrender value which will be paid to you and that is only when you surrender after 3 or more years. This value is around 30% of the premiums paid.

Documents required to Surrender LIC policy:

I hope you got the actual meaning of surrendering the policy. To surrender a policy you will require some important documents these are:

1. Original Policy Bond document
This is the official document provided by the firm when buying an insurance policy.

2. LIC Policy Surrender Form No.5074
You will also require the surrender form
Download LIC Form 5074 & 3510

3. LIC’s NEFT Form
This document is optional which means that if you don’t have or you are not using the surrender form then this will be required.

4. Original I’d Proofs Like PAN Card, Driving License,  or Aadhar Card.

5. Bank Account Details.
Your bank account details to which you want the surrender value to send.

How to surrender LIC policy?

LIC has made it very simple for you to surrender the policy. It’s not much difficult as what people think. Here is the very simple process:

1. The first step to surrender or discontinue the policy is that you will have to fill up the LIC NEFT Form & LIC surrender Form.

2. While filling up the form you will have to attach the important documents mentioned above which are Original I’d Proofs And the original policy bond document

3. You will also have to write the reason why you are surrendering the LIC policy. This should be handwritten (letter written from any machine may not be accepted by the firm & for this, you may have to do it again)

4. After doing all these tasks, the last step is to send all these documents to the firm. You can send through any means such as by post.

5. The LIC team will review your details and other documents and will process your request accordingly.

6. The surrender value will be sent to your bank after reviewing and some little tasks.