How to buy RBI bonds online?

govindsingh February 3, 2023

7 min read

How to buy RBI bonds is a question often asked by seasoned investors or risk-averse investors and individuals ready to set foot in the dynamic world of investing.

The steady cash flow requirement, security, and higher yield make RBI bonds one of the best investment options. On the contrary, in other investment alternatives, the return varies per market conditions.

In this article, we will give you quick-witted and brief information about these Government issued secured bonds, known as RBI Floating rate bonds, and where one can buy RBI bonds online.

Eligibility to buy RBI bonds:

Individuals in their capacity or based on individual capacity but on a joint basisOn behalf of a father/guardian/mother or minor A Hindu Undivided Family (HUF)

Rate of interest on RBI Bonds:

These RBI Bonds, also known as the RBI Floating Rate Savings Bonds 2020 (Taxable), have a seven-year duration with a current taxable interest rate of 7.35%.

As the interest rate on these bonds is benchmarked on the National Savings Certificate or NSC rate, they are known as floating-rate bonds. These variable-rate bonds will continue to earn a higher return on investment of 0.35 basis points over and above the current NSC rate of 7%.

It complies with the scheme criteria that were published on June 26, 2020. If NSC's return on investment changes, the coupon/interest rate on these bonds could alter every six months, on January 1 and July 1.

Issue Price of RBI Bonds:

These RBI Bonds are issued at 100 percent, which means at par. They are issued at face value of a minimum of INR 1000 and then multiples thereof. Moreover, the issue price will be a Nominal INR 1000. Moreover, the RBI Bonds will be issued in a Bond ledger account. A holding certificate will be generated as proof of subscription to the customer.

Features of RBI Bonds:

Unlike zero coupon (interest) bonds, you usually receive a fixed coupon or interest when you invest in RBI coupon bonds. However, in RBI Floating rate bonds, the interest rate changes after the period specified in the feature of the bond. Thus, RBI Floating rate bonds are vulnerable to fluctuations in interest rates. It is not like any Fixed deposit (FD) wherein the individuals know the rate of interest they will receive at maturity. In the case of RBI bonds, the term of the bond is pre-decided and fixed. However, if an individual is not interested in keeping the bond and retaining it, they can opt to sell it in the secondary market. The bonds will then be sold at the prevailing market price only if they are available for trade. Furthermore, if the holder of the RBI bonds becomes a Non-resident Indian or an NRI, he can hold the bond till the end of the tenure or up to maturity. The Bonds will only be issued in electronic form and will be kept to the holder's credit in an account with the Receiving Office called a Bond Ledger Account (BLA).From the bond issuance date, interest on the bonds will be payable every six months.Direct interest deposit into the bond holder's account will be the norm.The bonds must be repaid when seven years have passed. Premature withdrawal is only permitted for people 60 years of age or older and must submit documentation to prove their date of birth. For people between the age group of 60 and 70, the minimum lock-in duration is six years. The waiting period is five years for those who are 70 to 80 years old; for those over 80, it is four years.Even though you ask for redemption in accordance with your age bracket, the money will be transferred during the very next interest rate period. Therefore, regardless of when you submit your request for an early withdrawal, the Government will do so either on July 1 or January 1 of each year. Additionally, the Government will take 50% of the last coupon payment in cases of premature closure.

How to buy RBI bonds online?

There are two ways to buy RBI bonds:

You can purchase the bond from RBI Retail DirectYou can also purchase RBI Bonds from banks and the Stock Holding Corporation of India.

RBI Retail Direct:

RBI Retail Direct is a one-stop shop scheme for individual investors to invest in Government securities. Under this, retail investors can open a Gilt Securities Account with the Reserve Bank of India by the name of "Retail Direct Gilt" or RDG. However, through RBI Retail Direct, individual investors can only purchase zero-coupon bonds. To purchase RBI coupon bonds, they have to purchase them via banks.

Now if you want to know details about RBI bonds we recommend you to click here and read a detailed article on RBI Bonds to plan your retirement.

Buy RBI bonds from banks and Stock Holding Corporation of India:

You can purchase RBI bonds from the below mentioned banks by going to the selected bank’s internet facility for banking and filling the details required.

State Bank of IndiaBank of IndiaCanara Bank, including Syndicate BankPunjab National Bank Bank of Baroda, including Dena Bank and Vijaya BankBank of MaharashtraIndian Overseas BankCentral Bank of IndiaIndian Bank, including Allahabad BankPunjab & Sind Bank

Certain essential points to mention while purchasing the bonds from the banks mentioned above:

Applications for the Bonds will be accepted at the selected SBI, Nationalized Banks, IDBI Bank Ltd, Axis Bank Ltd, HDFC Bank Ltd, and ICICI Bank Ltd branches in the form of Bond Ledger Accounts.Bond subscription must be made in cash (up to $20,000 only), cheques, drafts, or any other appropriate electronic payment method as determined by the Receiving Office.Only non-cumulative bonds will be issued for the bonds.There won't be a cap on how much money can be invested in the Bonds.Income tax: Depending on the bond holder's specific tax situation, interest on the bonds will be subject to income tax under the Income-tax Act of 1961.Bonds will not be subject to wealth tax under the 1957 Wealth Tax Act.