The Chairman & Managing
State Bank of India & 18 Nationalised Banks
Axis Bank Ltd., ICICI Bank Ltd., HDFC Bank Ltd.,
Stock Holding Corporation of India ltd.(SHCIL)
7.75% Savings (Taxable) Bonds,
It has been decided by the
Government of India to issue 7.75% Savings (Taxable) Bonds, 2018 with
effect from January 10, 2018 in terms of GoI notification F.No.4(28) -
W&M/2017 dated January 03, 2018. A copy of the Government Notification
is enclosed. The
salient features of the Bond are detailed below. A copy of the Circular,
Government Notification and Press Release with regard to this
Scheme also have been placed on our website (rbi.org.in).
2. Eligibility for Investment: The Bonds may be held by –
(i) an individual, not being a
or her individual capacity, or
individual capacity on joint basis, or
individual capacity on any one or survivor basis, or
behalf of a minor as father/mother/legal guardian.
(ii) a Hindu Undivided Family.
3. Limit of Investment:
There will be no maximum limit
for investment in the Bonds.
4. Tax Treatment:
(i) Interest on the Bonds will
be taxable under the Income Tax Act, 1961 as applicable according to the
relevant tax status of the Bond holders.
(ii) The Bonds will be exempt
from wealth-tax under the Wealth Tax Act, 1957.
5. Issue Price:
(i) The Bond will be issued at
par i.e. at ? 100.00.
(ii) The Bonds will be issued
for a minimum amount of ? 1,000 (face value) and in multiples thereof.
Accordingly, the issue price will be ? 1,000 for every ?1,000 (Nominal)
to the Bonds will be in the form of Cash/ Drafts/ Cheques or any electronic
mode acceptable to the receiving office.
or drafts should be drawn in favour of the bank (Receiving Office),
specified in paragraph 10 below and payable at the place where the
applications are tendered.
7. Date of Issue
The Bonds will be issued, in
demat form and credited to the Bond Ledger Account (BLA) of
the investor/s on the date of tender of cash or the date of realization of
Bonds will be issued only in the demat form and held at the credit of the
holder in an account called Bonds Ledger Account (BLA),
opened with the receiving bank.
Bonds issued to the credit of BLA of an investors will be held by any
number of branches of the banks and SHCIL, as authorised by Reserve Bank of
India, as specified in paragraph 10 below.
Certificate of Holding as specified in form Annexure 1 will
be issued to the holder/s of Bonds held to the credit in BLA (in Form TBX or
Form TBY as applicable).
for the Bonds, either in physical form or electronic form, may be made
in Form A attached hereto as Annexure 2 or
in any other form as near as thereto stating clearly the amount, name and
full address of the applicant/s.
should be accompanied by the necessary payment in the form of cash/ drafts/
cheques / electronic credit as indicated in paragraph 6 above.
who have obtained exemption from Income Tax under the relevant provisions
of the Income Tax Act, 1961, shall make a declaration to that effect in the
application (in Form A) and submit a true copy of the certificate obtained
from Income Tax Authorities.
10. Receiving Offices
Applications for the Bonds will
be received at:
number of branches of State Bank of India, Nationalised Banks, three
private sector banks and SCHIL, as specified in the Annexure 3.
of any other bank as specified by the Reserve Bank of India in this behalf
from time to time.
holder or all the joint holders (investors) of a Bond, being individual/s,
may nominate in Form B annexed to this notification (Annexure 4)
or as near thereto as may be, one or more persons who in the event of death
of the sole holder/all the joint holders, as the case may be, would be
entitled to the Bonds and to the payment due thereon, provided that the
person or each of the persons nominated is himself/herself is competent to
hold the Bond.
the nomination has been made in favour 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.
event of the nominee or nominees predeceasing the holder, the holder may
make a fresh nomination.
investor(s) can make separate nomination for each investment.
nomination shall be made in respect of the Bonds issued in the name of a
nomination made by a holder of a Bond can be changed by a fresh nomination
in Form B, or as near there to as may be, or may be cancelled by
giving notice in writing to the Receiving Office in Form C,
annexed to the notification (Annexure
nomination and every cancellation or variation shall be registered at the
Receiving Office where the Bond is issued and shall be effective from the
date of such registration.
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.
The Bonds held to the credit of
Bonds Ledger Account of an investor shall not be transferable.
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.
on non-cumulative Bonds will be payable at half-yearly intervals from the
date of issue in terms of paragraph 7 above and interest on cumulative
Bonds will be compounded with half-yearly rests and will be payable on
maturity along with the principal.
latter case, the maturity value of the Bonds shall be ? 1,703.00 (being
principal and interest) for every ? 1,000/-(Nominal).
to the holders opting for non-cumulative Bonds will be paid from 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 period ending 31st July and
31st January on 1st August and 1st February.
on Bonds held to the credit of Bonds Ledger Account of an investor will be
paid, electronically by credit to bank account of the holder as per the
option exercised by the investor/ holder.
14. Tax Deduction at Source
will be deducted at source while making payment of interest on the
Non-Cumulative Bonds from time to time and credited to Government Account.
the interest portion of the maturity value will be deducted at source at
the time of payment of the maturity proceeds on the Cumulative Bonds and
credited to Government Account.
Provided that tax will not be deducted while making payment of interest/
maturity proceeds, as the case may be, to individual/s who have made a
declaration in the application form that they have obtained exemption from
tax under the relevant provisions of the Income Tax Act, 1961 and have
submitted a true copy of the certificate obtained from Income Tax
15. Advances/ Tradability
The Bonds shall not be tradable
in the secondary market and shall not be eligible as collateral for
availing loans from banks, financial Institutions and Non-Banking Financial
(i) The Bonds shall be repayable
on the expiration of 7 years from the date of issue.
(ii) Premature encashment in
respect of the Bonds shall be allowed for individual investors in the age
group of 60 years and above, subject to submission of document relating to
date of birth of the investor in support of age to the satisfaction of the
issuing bank, after minimum lock in period from the date of issue as
in period for investors in the age bracket of 60 to 70 years shall be 6
years from the date of issue.
in period for investors in the age bracket of 70 to 80 years shall be 5
years from the date of issue.
in period for investors in the age of 80 years and above shall be 4 years
from the date of issue.
(iii) In case of joint holders
or more than two holders of the Bond, the above lock in period will be
applicable even if any one of the holders fulfills the above conditions of
(iv) 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.
(i) Brokerage at the rate of ?
1.00 per ? 100 will be paid to the brokers registered with the Receiving
Offices, as listed in paragraph 10 above, on the applications tendered by
them and bearing their stamp, on behalf of their clients.
(ii) Brokerage and commission
will be paid by CAS, Nagpur on a monthly basis.
(iii) Handling/service charges
will be paid by PDO of jurisdiction.
Chief General Manager
Encls: As above