Congress leader P Chidambaram hit out at the Central government for discontinuing the Savings (Taxable) Bonds scheme, calling it a blow to citizens.
“Government has dealt another blow to citizens who save, especially senior citizens. It has discontinued the 7.75 per cent RBI Bonds,” Chidambaram said on his official Twitter handle.
Government has dealt another blow to citizens who save, especially senior citizens. It has discontinued the 7.75 per cent RBI Bonds.— P. Chidambaram (@PChidambaram_IN) May 28, 2020
“Government did this once before in Jan 2018. I protested vehemently. Next day they re-introduced the bond but reduced the interest rate from 8 per cent to 7.75 per cent. Effectively, after tax, the bond will yield only 4.4 per cent. That is now taken away. Why? I deplore this action,” the former finance minister said on Twitter.
The scheme that the Congress leader is talking about is commonly known as RBI, which is popular among retail investors who looking for safety of principal and a regular income.
“The Government of India, hereby notifies that the 7.75 per cent Savings (Taxable) Bonds, 2018...shall cease for subscription with effect from the close of banking business on Thursday, the 28th of May, 2020,” said a notification on Wednesday.
The Bonds, which are issued par at Rs 100, has a fixed minimum subscription of Rs 1,000. According to the scheme, the bonds are repayable on the expiration of seven years from the date of issue.
With the Reserve Bank of India (RBI) lowering the key short-term lending (repo) rate, the interest rate on bank fixed deposits as well as lending rates are on the decline. The repo rate is currently at an all time low historically at just 4 per cent.