As you know the RBI 8% (taxable) Bond issued in the year 2003 was having a lock in period of six years, where the interest of the Bond was not tax free, along with it’s six years of lock in period further makes it less attractive than its earlier counterpart. However, despite this, it was favourite instrument for retired people, specially because of the almost nil risk of investment. In a recent notification, RBI tries to give little more flexibility in term of withdrawals. Where it decided to provide the facility of premature encashment of these bonds to individual investors in the age group of sixty years and above, after a minimum lock-in period of three years from the date of issue as indicated below;
- Lock-in period for investors in the age bracket of 60 to 70 years shall be 5 years from the date of issue.
- Lock-in period for investors in the age bracket of 70 to 80 years shall be 4 years from the date of issue.
- Lock-in period for investors of the age of 80 years and above shall be 3 years from the date of issue.
An investor, desiring to avail of the facility of premature encashment, will have to submit documentary evidence in support of his/her date of birth to satisfaction of the agency bank. In case of joint holders or more than two holders of a bond, any one of the holders should fulfill the above conditions of eligibility.
For more on this find the RBI Circular RBI/2013-14/206 DGBA.CDD. No. 1448/13.01.299/2013-14