Former Union Finance Minister P. Chidambaram on Thursday said the decision to do away with Reserve Bank of India (RBI) bonds was a “cruel blow” to citizens as it had been one of the “risk-free” savings instruments since 2003.
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On Wednesday, a government notification said the 7.75% Savings (Taxable) Bonds, 2018, also known as RBI bonds or government bonds, shall “cease for subscription with effect from the close of banking business on Thursday, the 28th of May, 2020”.
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In a series of tweets, Mr. Chidambaram said citizens must demand that the bonds be restored immediately. “Government has dealt another blow to citizens who save, especially senior citizens. It has discontinued the 7.75% RBI bonds,” he said. The government had done this once before in January 2018.
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“I protested vehemently. Next day they re-introduced the bond but reduced the interest rate from 8% to 7.75%. Effectively, after tax, the bond will yield only 4.4 %. That is now taken away. Why? I deplore this action.”
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He said, “Every government is bound to provide at least one safe, risk-free investment option to its citizens. It was the RBI bond since 2003. After lowering the interest rates in PPF and small savings instruments, the abolition of the RBI bond is another cruel blow. All citizens must demand that the RBI bond must be restored immediately.”