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The Government Securities Act, 2006 and The Government Securities Regulations, 2007

41. Is the facility of automatic redemption available to the Relief/Savings Bonds holder? +

Yes. The facility of automatic redemption, i.e., the facility to receive maturity proceeds along with interest accruing thereon on due date without the hassle of visiting the RBI/Agency Bank and submitting physical discharge in respect of the maturing Relief/Savings Bonds is available to all the Relief/Savings Bond investors as explained at Question Nos. 36 & 37 above.

42. How the interest is paid in case of Relief/Savings Bonds? +

Relief/Savings Bonds provide the investors to opt for cumulative/non-cumulative interest payment. In case of cumulative bonds, the interest is payable along with the principal at the time of redemption. However, in case of non-cumulative bonds, the same is paid at half-yearly intervals. If an investor requires regular income flow then it is suggested that he/she should opt for non-cumulative mode of interest payment. Interest can be paid through interest warrants delivered through registered post or can be credited to the investor's bank account on due date, in case the investor has submitted the bank details as per the ECS Mandate form available in the offices of RBI and the Agency Banks. (A model format is given at the end of these FAQs).

43. Is there any TDS towards interest payment in respect of Relief/Savings Bonds? +

As explained at Question No. 31, with effect from June 1, 1997, there is no TDS upon interest payable on Government Security. However, as per Finance Act, 2007 and Government of India Notification No. F.4(10)-W&M/2003 dated May 31, 2007, tax has to be deducted at source on the interest exceeding Rupees ten thousand payable during a financial year on 8% Savings Bonds, 2003 (Taxable) with effect from June 1, 2007. Accordingly, there is no TDS upon interest payment in respect of Relief/Savings Bonds other than 8% Savings Bonds, 2003 (Taxable).

44. Is the facility to create pledge, hypothecation or lien against Relief/Savings Bonds available to the investors for availing loan against the Relief/Savings Bonds as collateral? +

Yes. The facility to create pledge, hypothecation or lien against Relief/Savings Bonds is available as in case of other Government securities as explained at Question Nos. 33 & 34. The Government of India has amended the notifications relating to 7% Savings Bonds, 2002, 6.5% Savings Bonds, 2003 (Non-Taxable) and 8% Savings (Taxable) Bonds, 2003 schemes allowing for pledge or hypothecation or lien of these bonds as collateral for obtaining loans from the scheduled banks with effect from August 19, 2008. However, such collateral facility is available only for the loans to be availed by the holders of the bonds and not in respect of the loans availed by third parties.

45. What is the procedure/documentation for recognition of title to Relief/Savings Bonds of deceased sole holder or joint holders? +

The title to Relief/Savings Bonds of a deceased sole holder or joint holder may be recognised as per the simplified procedure explained at Question No. 16.

46. Whether Relief/Savings Bonds can be transferred? +

Yes. Relief/Savings Bonds, like other Government securities, can be transferred by execution of transfer forms as explained at Question No. 14. However, the specific Government loan notifications issued for the 7% Savings Bonds, 2002, 6.5% Savings Bonds, 2003 (Non taxable) and 8% Savings Bonds, 2003 (Taxable) have prescribed the specific conditions subject to which such transfers may take place. While all the three Savings Bonds are transferable to the nominee in case of death of the holder, the 7% Savings Bonds, 2002 and 6.5% Savings Bonds, 2003 (Non taxable) are also transferable by way of gift to a "relative" as defined in section 6 of the Indian Companies Act, 1956. Section 6 of the Indian Companies Act, 1956 defines "relative" as under:

A person shall be deemed to be a relative of another if and only if,

a) they are members of a Hindu undivided family; or
b) they are husband and wife; or
c) the one is related to the other in the manner indicated in Schedule 1A of the Indian Companies Act, 1956.

Apart from the above, the three Savings Bonds shall also be transferable in favour of the pledgee/creditor, if the pledgee/creditor invokes the pledge, hypothecation or lien as per Regulation 21 (3) of the G S Regulations.

47. Whether an investor is entitled for any compensation for the late receipt/ delayed credit of interest warrants/maturity value of investments, etc.? +

The bank shall compensate the investors for the above mentioned financial loss at a fixed rate of 8% per annum (with effect from April 10, 2012).

Electronic Clearing Service (Credit Clearing) Mandate Form

(Investor (s)’s option to receive redemption proceeds and
interest payments through Credit Clearing Mechanism)

Investor(s) Name and Address

Member ID No./BLA No.
PAN/GIR No.*
Telephone No./Mobile No./E-mail ID

:
:
:

Particulars of Bank account

Name of the Bank
Name of the branch
1. Address
2. Telephone No.
9-Digit MICR code number of the bank and branch appearing on the MICR cheque issued by the bank
Type of the account (Savings, Current or Cash Credit) with codes -10/11/13
Ledger and Ledger folio number
Account number (as appearing on the cheque book)

:
:
:
:
:

:
:

(In lieu of the bank certificate to be obtained as under, please attach a blank cancelled cheque or photocopy of a cheque or front page of your savings bank passbook issued by your bank for verification of the above particulars)

4. Date of effect :

I/We hereby declare that the particulars given above are correct and complete. If the transaction is delayed or not effected at all for reasons of incomplete or incorrect information, I/We would not hold the user institution responsible. I/We have read the option invitation letter and agree to discharge the responsibility expected of us as a participant under the scheme.

Date:

(.....................................)
Signature(s) of the Investor(s)

(In case of joint holdings, all the investors, whose signatures are registered with PDOs, should sign here)

Certified that the particulars furnished above are correct as per our records.

Bank’s Stamp:

Date:

(.................................)
Signature of the authorised official of the Bank

* Compulsory for investors due to receive maturity proceeds exceeding Rs. One lakh

These FAQs are issued by the Reserve Bank of India for information and general guidance purposes only. The Bank will not be held responsible for actions taken and/or decisions made on the basis of the same. For clarifications or interpretations, if any, investors are requested to be guided by the relevant circulars and notifications issued from time to time by the Bank and the Government as well as the relevant provisions of the Government Securities Act, 2006 and the Government Securities Regulations, 2007.