New Delhi: With the interest rate in the downfall, the government has stop issuing the savings bonds that used to give 7.75 per cent interest rate on a taxable basis on Thursday. The 7.75 per cent Government of India Savings (Taxable) Bonds, also known as RBI 7.75 per cent bonds has attracted retired investors who had locked in money in the instrument for a period of four to six years, depending on their age.

"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," according to the Reserve Bank of India notification on its website.

The instrument remained popular among senior citizens as it offered the safety of principal and a regular income. However, NRIs are not eligible to buy these bonds.

The Bonds were issued at par at ₹100 with the minimum subscription fixed at ₹1,000.

These bonds are issued with a tenor of seven years. However, premature encashment is subject to the age of the investor. For instance, after six years premature withdrawal can be made for those between the ages of 60 and 70; after five years for investors between 70 and 80; and four years for those above the age of 80. However, premature encashment is not available for those below 60 years of age. Although 50 per cent of the interest rate which is payable in the last six months of the holding period is typically recovered in cases of premature encashment.

On March 31, the government has reduced rates on most of its small savings schemes, including the Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS) and post office fixed deposits. The key short-term lending (repo) rate has also been cut touching a historic low of 4 per cent.

Also Watch: Locust attack: Another crisis in the country | Ghanti Bajao