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Subject : Avail Government of India 8.5% RBI Tax Free Relief Bond


In the scenario with the share market bitten by the scam, with some banks compelled to down their shutter with company fixed deposit stopping the payment of interest, and the mutual funds being burdened by allegations of fraudulent practices, the exasperated investor is faced with the single Problem as to where he should keep his hard earned investible funds. The investment in 8.5% RBI Relief Bonds (Tax Free Bonds) is not affected by any such outside stresses. The investment is safest irrespective of ups and downs in financial market

The bonds may be held by an individual, HUF *& NRI (on non repatriation Basis)/

Minimum amount to be invested is Rs. 1---/- and multiple of Rs. 1000/-

Bonds in the form of Bond Ledger Account & Government Promissory Note.

Interest at the rate of 8.5% per annum will be paid at half-yearly intervals and or cumulative.

Incase of cumulative Rs.1000 becomes Rs. 1516/- after 5 years.

Incase of Bond Ledger Account Interest will be paid by ECS or bank mandate crediting directly to bank account of the bond holder or interest will be mailed directly to holders address by every six months.

Incase of Government Promissory Note interest will be paid by post dated interest warrants attached to the Bonds.

On Income Tax, interest on Bonds will be exempted from Income-tax and the bonds will be exempted from wealth tax.

The bond will provide nomination facility is available only to Bond ledger option holders.

The Bonds shall be repayable on expiry of 5 years from the date of issue.

Premature encashment of the Bonds is not allowed.

The matured Relief Bond can be reinvested in this scheme. In that case a new application form alongwith renewal application form with discharged certificate.

The RBI may reduce interest rate at any point of time. So the investors are advised to rush their investments immediately.


1. Secured Investment : Investment in Relief Bonds is free of any kind of risk and backed by Government of India.

2. Rate & Return : Return of 8.5% tax free interest is assured for 5 Years payable half yearly of compounded with half yearly rests and payable on maturity.

3. Tax Free Interest :

A. Interest from Relief Bond is fully exempted from income tax.

B. Interest from Relief Bond is fully exempted from wealth tax.

4. Who can Invest :

A. Resident Individual

B. Minor (Signed by Guardian)

C. H.U.F. (Hindu Undivided Family)

D. Non Resident Indian (Without the right of repatriation)

5. Limit of Investment :

A. Minimum Investment : Rs. 1000/- & in multiples thereof

B. Maximum Investment : No Limit.

6. Terms : 5 years

7. Electronic Clearing Service : Interest payments will be credited to Bank A/c of the Investor through Electronics Clearing Systems.

8. Interest :

A. Non-Cumulative Interest paid at half yearly intervals i.e. on 1st January and 1st July every year.

B. Cumulative on Maturity

C. Continue to earn interest, post maturity, of coupon rate upto date of encashment.

9. Maturity Value : The Maturity Value of Bonds shall be Rs. 1516 for every Rs. 1000/- in 5 years.

10. Form of Bonds :

A. Bond will be issued to Bond Ledger Account Only.

B. Government Promissory Notes.

11. Nomination : A Sole holder of Bond Ledger A/c can nominate one or more persons.

12. Loan : The Bonds may be pledged with banks for the purpose of obtaining advances.

13. Liquidity : After 5 years as per the term of Bonds.

14. Mode of Subscription : Subscription to Bonds will be in the form of cash/draft/cheque or matured Relief Bonds standing in the name of applicant.

15. Repayment :

A. Repayment on expiry of 5 years from the date of issue.

B. Premature encashment not allowed.

16. Transferability : The bonds are transferable by endorsement of tranfer deed.

17. Nomination : Nomination facility is available.

18. Gift : Gift of the bonds made by an initial subscriber will be exempted from gift tax subject of Rs. 5 Lakhs in one or more years.

19. Interest Yield Table : The yield table is as under

2 Principal Amount 1,000 5,000 10,000 15,000 20,000 25,000 50,000 75,000 100,000 500,000 1,000,000
3 Interest Rate 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5%
4. Days/6 Month 182.50


182.50 182.50 182.50 182.50 182.50 182.50 182.50 182.50  
5. Non-Cum H/Y 43 213 425 638 850 1,063 2,125 3,188 4,250 21,250 42,500
6. Days/12 Month 365 365 365 365 365 365 365 365 365 365 365
7. 6 1043 5213 10425 15638 20850 26063 52125 78188 104250 521250 1042500
8. 12 1087 5434 10868 16302 21736 27170 54340 81510 108681 543403 1086806
9. 18 1133 5665 11330 16995 22660 28325 56650 84975 113300 566498 1132996
10. 24 1181 5906 11811 17717 23623 29529 59057 88586 118115 590574 1181148
11. 30 1231 6157 12313 18470 24627 30784 61567 92351 123135 615673 1231347
12. 36 1284 6418 12837 19255 25674 32092 64184 96276 128368 641839 1283679
13. 42 1338 6691 13382 20074 26765 33456 66912 100368 133824 669118 1338235
14. 48 1395 6976 13951 20927 27902 34878 69756 104633 139511 697555 1395110
15. 54 1454 7272 14544 21816 29088 36360 72720 109080 145440 727201 1454402
16. 60 1516 7581 15162 22743 30324 37905 75811 113716 151621 758107 1516214

Detail : Please give following Details/Documents to enable us to process your application.

Name of 1st Applicant/HUF/Minor  
Father's Name
Husband's Name
Residential Address
 Residential Telephone
Address of 1st Applicant
Telephone Nos.
  (G) Fax Nos.
  (H) E-Mail Address
  (I) Date of Birth (DD/MM/YY)
Name of 2nd Applicant/HUF/Minor  
Father's Name
Husband's Name
  (C) Residential Address
  (D) Residential Telephone
  (E) Address of 2nd Applicant
  (F) Telephone Nos.
  (G) Fax Nos.
  (H) E-Mail Address
  (I) Date of Birth (DD/MM/YY)
Detail of Nominee/Guardian of Minor  
Father's Name
Husband's Name
  (C) Residential Address
  (D) Residential Telephone
  (E) Address of 2nd Applicant
  (F) Telephone Nos.
  (G) Fax Nos.
  (H) E-Mail Address
  (I) Date of Birth (DD/MM/YY)
Details of the Main Banker & Bank Account (Only Main Banker)
Name and Address of the Bank
Type of Account CURRENT A/C
Account No.
MICR Code No.
Signature of the
Name of Signatory
Full Residential Address
Type of Holding A. Individual
  B. Minor (Signed by Guardian)
  C. H.U.F.
  D. Non Resident Indian (Without right of repatriation)
  E. Power of Attorney Holder
Form of Bonds: A. Bond Ledger A/c
  B. Promissory Notes
I/We wish to draw interest on A. Maturity (Cummulative)
  B. Half Yearly Interest on 1st Jan. & 1st July every year (Non Cummulative)
Relationship of Applicant with A. Father
  B. Mother
  C. Legal Guardian
  D. Not Applicable
Registration No. incase of Minor/HUF/Power of Attorney
Two Self Certified copies of Birth Certificate  
Two Self Certified copies of Permanent Income Tax A/c. No. Allotted by the Income Tax Department  

If you have any queries, please feel free to call or fax us.

Thanking You,

Yours faithfully,
Impex Solution

Bharat Parekh



RBI Relief Bond
  •   Application can be made by both resident and non resident Indians (NRIs).
  •   Apart from tax benefits another advantage is that advances/loans can be obtained from banks against   security of the Relief Bonds.
  •   The bonds will be issued for a minimum amount of Rs.1,000/- (face value) and in multiples thereof.
  •    Bonds bear interest rate of 9% per annum. Interest will be payable at half-yearly intervals from the date of    issue or compounded with half-yearly rests and will be payable on maturity alongwith the principal.

Key Features
Issuer Reserve Bank of India
Face Value Rs 1,000
Min. Investment Rs 1,000
Interest (annualised) Half yearly yield: 13.74%
Cumulative yield: 14.05%
Payable On half yearly rests or cumulatively
Maturity 5 years
Subscription Cash/cheque/ drafts/matured relief bonds
Tax exemptions Exempt from wealth and income tax
Security Loans can be obtained using these bonds as collateral
Applications Offices of RBI and bank branches as notified by RBI
Nomination facility Available


Government of India have vide their notification No.4 (1)W&M/99 dated 03.05.99, modified the scheme of Relief Bonds, providing for issue of the Bonds in dematerialised form (DEMAT), namely in the form of "Bond Ledger Account" in lieu of physical securities alone issued hithereto. The facility is available at 714 designated branches of Public Sector Banks and 14 RBI offices (receiving offices) throughout the country. The designated branches of State Bank of Travancore are as follows:
1. Puthenchanthai
2. Kollam Main
3. Kottayam Civil Station
4. Pathanamthitta
5. Broadway Ernakulam
6. Palakkad
7. Calicut Main
8. Trichur Main
These branches will open the Bond Ledger Accounts in their books in the name of investors with initial subscription. The investors can make further investments in the Bonds in the same Bond Ledger Account. A "Certificate of Holding" will be issued to the investors evidencing the holding of the bonds.


This facility is devoid of complexities of holding securities in physical form; and DEMAT form of the bonds ensures protection against the loss/theft with added advantage of having the interest credited to the Bank account of the holder maintained in the same branch. The Bond Ledger Account can be held at any of the above branches convenient to the depositor which may be as near to the resident of the investor as possible. On maturity of the bonds, redemption proceeds will be paid by the receiving office itself by credit to the Bank account of the holder.

Salient features of the DEMAT scheme

1. Who can invest in Relief Bonds ?

Relief Bonds can be held by :
i) an individual - in his individual capacity, or Jointly, or on behalf of the minor as father/mother/legal guardian.
ii) A Hindu undivided family
iii) A Non-Resident Indian - In the case of repatriable accounts of NRI (NRE/FCNR) both interest and principal are repatriable. Investment made out of non-repatriable funds such as NRO/NRSR is not subject to right of repatriation.

2. How much can be invested ?

i) Minimum amount Rs.1000/- and in multiples of Rs.1000/-. No maximum limit. Only one Bond ledger Account can be opened. A simple declaration form to the effect that the applicant does not have any other BLA should be furnished along with the application form.

3. Date of Issue of Bonds

The date of issue of bonds will be date of receipt of subscription in cash/draft and in the case of deposits by cheques, the date of realisation thereof. Cheques or drafts should be drawn in favour of the Bank and payable at the place where the applications are tendered. Accordingly the bonds will bear interest from that date.

4. Is Reinvestment possible?

The matured Relief Bonds can be re-invested in the scheme.

5. Form of Bonds

i) The Bonds will be in dematerialised form (demat) i.e. in the form of an account called "Bond Ledger Account"(BLA) in the books of the authorised branches. A certification evidencing the investment held in the Bond ledger Account will be issued to the investor.
ii) Only a single BLA will be opened in the name of an investor.
iii) The investor can make further investments in Relief Bonds in the same account and certificate of holding will be accordingly updated.(separate "Certificate of Holding" for each additional investment in BLA may be issued on a specific request from the investor subject to conditions laid down by RBI.)

6. Repayment

The Bonds will have lock-in period of 5 years from the date of issue and will be repayable only on the expiry of the period. No premature encashment /withdrawal is allowed.

7. Return on Investment

i) Option A - Non-cumulative : Interest is payable by Receiving Offices half-yearly at 9% per annum by credit to the Bank account of the holder maintained in the designated bank branch or by issue of cheques / payment orders. In case of investment in Relief Bonds made in RBI offices, interest payment will be by credit to the Bank account of investor through Electronic Clearing Service (ECS) or by issue of interest warrants at the option of the holder.

ii) Option B - Cumulative : Interest at 9% per annum compounded with half-yearly rests, is payable on maturity along with the principal amount by credit to the Bank account of the holder at designated branch itself (i.e. Where the deposit account is maintained) or by issue of Pay Order.

8. Yield Table

Amount of Investment Non-cumulative Option - Half yearly interest Cumulative Option - Maturity Value after 5 years(Principal+Interest)
1000 45 1553
5000 225 7765
10000 450 15530
15000 675 23295
20000 900 31060
25000 1125 38825
50000 2250 77650
75000 3375 116475
100000 4500 155300
500000 22500 776500
1000000 45000 1553000

9. Bank Account with Public Sector Bank

To facilitate payment of half-yearly interest under option A and repayment under both the options, it is desirable for the investor to maintain a Bank Account in the same branch.

10. Post Maturity Interest

If the bonds are not redeemed by the holder on maturity, they will continue to earn interest at the respective coupon rate ( i.e. 9% per annum) upto the date of encashment.

11. Tax benefit

i) Interest is fully exempt from Income Tax.
ii) The Bonds are exempt from wealth Tax

12. Nomination

i) A sole holder or a sole surviving holder of a Bond Ledger Account can nominate one or more persons.
ii) Now facility for nomination for each investment available.
iii) A nomination made by a holder can be varied or cancelled.

13. Whether Loans can be obtained against the Bonds

Loans from Banks can be availed of against the security of the Bonds. Advance against the Bonds can be considered at all branches (since there is no provision to record a lien for taking the security as collateral it has to be got transferred in Bank's name). The Bank may continue to pay interest to the original holder.

14. Application for the Bonds

i) Application for the bonds may be made in the prescribed form, which is available free of charge at the receiving offices as well as on our Website
ii) Completed application form/s should be accompanied by payment in cash / draft / cheques. The drafts or cheques (crossed account payee) should be drawn in favour of receiving offices.
iii) Application in the name of HUF - The Kartha should furnish the declaration as contained in application form.
iv) In case of NRI investor, a letter of undertaking in the specified form should be submitted along with the application form.

15. Transferability

The Bond Ledger Account is transferable, wholly or in part, by execution of an instrument of transfer in the prescribed form.

In the case of full transfer of the account, fresh investments if any, by the loan borrower will result in opening a new BLA in his name.