After closing the RBI 7.75% bonds with effect from May 28, 2020, the government came up with 7.15% floating rate savings bonds from July 1. Interest for such bonds for the period between July 1 and December 31 has been pegged at 7.15% and shall be payable on January 1, 2021.
Such floating rate bonds shall see interest rate revision every six months.
For investing purpose, any Indian resident regardless of the age can invest in the scheme; also HUFs are allowed to invest. For senior citizens there is a special treatment given as they can withdraw prematurely from the investment.
Senior Citizens Allowed Premature Withdrawal From Floating Rate Savings Bonds
While 7.15% RBI floating rate savings bonds come with 7 year maturity period. Senior citizen investor category is allowed premature withdrawal but after the end of lock-in period. And this lock-in period varies with the investors' age.
Say for instance for investors in the age group of 60-70 years, lock-in period is 6 years from the date of issue
Lock in for 70-80 years aged investor group is 5 years from the issuance date of such bonds, while for investors aged 80 years or more, the lock period stands at 4 years from the issue date.
But for availing the premature withdrawal facility, the subscriber needs to produce a date of birth certificate to the issuing bank supporting his or her age. Also, in case the bonds are held jointly or there are over 2 holders, any one of the subscriber can address the requirement and may withdraw prematurely.
Penalty charged on premature withdrawal from RBI floating rate savings bonds
This premature withdrawal facility comes at a cost of 50% of interest due and payable for the last six months of the holding period.