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There has been a sharp fall in the interest rate for the small saving schemes, such as the senior citizen saving scheme, post office time deposits and public provident fund, for the quarter starting April 2020. This has made these schemes less attractive than before. In such a situation a lot of investors are looking at the option of investing in the 7.75% Government of India Bonds. Also known as the RBI 7.75% bonds, these bonds offer regular half yearly interest to investors. These fixed income bonds come with certain disadvantages: 1. The tenure is 7 years and they cannot be sold earlier. 2. The interest is taxable at the tax slab 3. Inflation reduces the post-tax real return to almost 0. The RBI Savings Bonds are however a good option for certain categories of investors. For example, for retired individuals who are looking for a regular income, or for someone looking to meet certain fixed expenses, the 7.75% GOI Bonds could be interesting.
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