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Types of Savings and Investment

RBI 7.75% Savings Bonds

Before we proceed with the next saving instrument, i.e., RBI 7.75% Savings bonds, we need to understand the concept of bonds. So, what is a bond? A bond is a fixed income instrument that represents a loan from an investor to the borrower (in this case, RBI). Now, let us get the details of it. 


RBI 7.75% Bonds offer 7.75% interest rate over a tenure of 7 years. The minimum investment has to be of ₹1000 and there is no cap on maximum investment. The principal is locked in throughout the tenure of 7 years for people under the age of 60. However, premature encashment is allowed for people above 60 years of age.

How to Apply for RBI 7.75% Savings Bonds?

The following documents are required to apply for RBI 7.75% Savings Bonds:

  • Duly filled Application form.
  • Identity proof like PAN card, Passport.
  • Address proof such as Telephone bill, Aadhaar card.
  • Age Proof Document Passport, Senior Citizen Card, a Birth certificate issued by Corporation or registrar of births and death, Voter ID card, PAN card etc.

This bond can be bought from banks and Stock Holding Corporation of India Limited (SHCIL) offices. It is not necessary to have a savings account in the same Financial Institution where the Bond is being bought from. 

Interest Rate Mechanism

For RBI 7.75% Savings Bonds, the interest rate is 7.75% in payout mode and if compounded then the interest rate is effectively 7.90 % p.a.  Compounding is done on a half-yearly basis. 

Tax Implication

There is no tax exemption on the principal amount or the interest.

Risk associated with RBI 7.75% Savings Bonds

There is no risk involved as this bond is backed by the Government of India. Principal and Interest are guaranteed. If inflation turns out to be higher than the nominal interest rate of the investment, there would be no real returns available. Hence, it is not inflation protected. 

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