Executive Summary:
This document announces the launch of the Floating Rate Savings Bonds 2020 (Taxable) scheme, effective July 1, 2020, according to the Government of India Notification F.No.410 BWM2020. It outlines the terms and conditions for issuance, eligibility, subscription methods, and other key features of the bonds. Consolidated operational guidelines will be issued separately on the RBI website.
Key Points / Main Content:
* **Eligibility:**
* Available to resident individuals, either individually, jointly, on a survivor basis, or on behalf of a minor.
* Available to Hindu Undivided Families.
* **Subscription:**
* Accepted via cash (up to ₹20,000), drafts/cheques, or electronic modes.
* **Form of Bonds:**
* Issued and held electronically in a Bond Ledger Account (BLA) with the Receiving Office.
* **Receiving Offices:**
* Available at branches of entities listed in the attached document.
* **Nomination:**
* Governed by the Government Securities Act, 2006, and Government Securities Regulation, 2007.
* **Transferability:**
* Non-transferable except to nominees/legal heirs in case of the bondholder's death.
* **Interest (Floating):**
* Payable half-yearly on January 1st and July 1st.
* No cumulative interest option.
* The coupon rate resets every half year starting January 1, 2021.
* The coupon rate is pegged to the prevailing National Saving Certificate (NSC) rate with a spread of 35 bps.
* The coupon rate for the first coupon period, payable on January 1, 2021, is fixed at 7.15%.
* **Brokerage:**
* Receiving Offices will receive brokerage at 0.5% of the mobilized amount.
* At least 50% of the brokerage must be shared with registered brokers/sub-brokers.
* **Operational Guidelines:**
* Consolidated operational guidelines will be issued and placed on the RBI website.
* **Other Terms:**
* All other terms and conditions are specified in Notification F.No.42WM2018 dated March 27, 2018.
Impact Analysis:
* **Investors:**
* Impact: Provides a new investment option with floating interest rates linked to NSC rates.
* Action Required: Understand the terms and conditions, open a Bond Ledger Account (BLA) at a Receiving Office, and subscribe to the bonds.
* **Receiving Offices:**
* Impact: Act as intermediaries for subscription and servicing of the bonds.
* Action Required: Accept subscriptions, open Bond Ledger Accounts, share brokerage with brokers/sub-brokers, and follow operational guidelines to be issued by RBI.
* **Brokers/Sub-brokers:**
* Impact: Opportunity to earn brokerage on applications tendered on behalf of their clients.
* Action Required: Register with Receiving Offices and facilitate bond subscriptions for their clients.
Key Entities Referenced
Floating Rate Savings Bonds 2020 Taxable: A savings bond scheme launched by the Government of India.
Government of India: The governing body of India, issuer of the bonds.
RBI: Reserve Bank of India, the central bank of India and the regulatory body.
Government Securities Act, 2006: A law pertaining to government securities in India.
Government Securities Regulation, 2007: Regulation pertaining to government securities.
Bond Ledger Account BLA: An account where the bonds are held in electronic form.
Ministry of Finance Department of Economic Affairs: A department of the Government of India responsible for economic affairs.
National Saving Certificate NSC: A Government of India savings bond.
RBI/2019-2020/261
IDMD.CDD.No.3145/13.01.299/2019-20 June 26, 2020
(Updated on June 27, 2022)
(As per list attached)
Dear Sir/Madam,
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 the entities as per the list
attached.
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.
________________________________________________________
आंत�रक ऋण प्रबंध िवभाग, क�द्रीय काया�लय, क�द्रीय काया�लय भवन, 23 वी ंमंिज़ल, शहीद भगत िसंह माग�, मुंबई - 400 001, भारत
फोन: (022)-22661602-04; फै� : (022)-22644158, 22705125; ई-मेल: cgmidmd@rbi.org.in
Internal Debt Management Department , Central Office, Central Office Building, 23 rd Floor, Shahid Bhagat Singh Marg, Mumbai-400 001,
India Tel: (022)-22661602-04; Fax : (022)-22644158, 22705125; E-mail: cgmidmd@rbi.org.in
����� ���� ��, ���� ������ �����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.
Yours faithfully,
(T. K. Rajan)
Chief General Manager