What are RBI Bonds?

RBI Bonds are financial instruments issued by the Reserve Bank of India, offering fixed returns to investors. These secure investments contribute to national development.
What are RBI Bonds?
3 min
10 April 2024

RBI bonds can be a prudent choice for investors looking for a stable and risk-free investment. It allows them to invest their money for a fixed lock-in period and guarantee interest rates backed by the Reserve Bank of India (RBI).

Continue reading this blog to learn more about an RBI bond, how to start investing, what documents are needed, lock-in periods, and other key features.

What are RBI bonds

RBI bonds are similar to fixed deposits (if we consider the distinction of bonds vs FD), where you invest a fixed amount for a fixed lock-in period and earn guaranteed returns. However, unlike Fixed deposit, you cannot withdraw money before the lock-in period, and the interest is calculated semi-annually on the 1st of January and July.

Think of RBI bonds as giving a loan to the government, and they will provide you with the total amount (principal plus interest) after the lock-in period.

What is the minimum investment

The good part is that you can start the investment at as low as Rs. 1,000 with no maximum range at any time of the year. This opens up a range of choices for individuals of all income groups or first-time investors looking to invest in RBI bonds. The interest rate is applicable from the day of the debit of funds from your bank account.

What is the eligibility to invest in the bonds

You must be an Indian citizen to invest in RBI bonds, whether you are a minor or not. Although your parents should manage your account. Non-resident Indians (NRI) are not eligible for this investment instrument.

What documents are required to invest in RBI bonds

The primary documents required for individual investors are:

  • You duly filled out the application form, which you can download from the RBI website.
  • Your PAN card copy.
  • Your address proof, such as an Aadhar Card, a house electricity bill in your name, or a passport.
  • With a cancelled check from the bank account, you want your maturity amount to be credited.

Document requirements for minors

  • Guardian-signed application form.
  • PAN card copy of the minor or guardian.
  • Address proof copy of the minor or guardian.
  • Minor’s birth certificate, attested by the guardian.
  • A cancelled check of the bank account to which you want the maturity amount to be credited.
  • POA document (in the case of a Power of Attorney (POA)).

Document requirement for Hindu Undivided Family (HUF)

Duly filled out the application form for Karta, the eldest male member of the family.

  • PAN card copy of the HUFs.
  • Address proof copy of the HUFs (check the previous text).
  • A cancelled check of the bank account to which you want the maturity amount to be credited.
  • List of coparceners in the HUF with Karta’s signature.

[Note: All the documents must be self-attested by the applicant.]

Lock-in period for the bonds

The lock-in period for RBI bonds is seven years. You can withdraw your money before this time unless you are over 80 (the minimum lock-in period is four years), over 70 (the minimum lock-in period is five years), or over 60 (the minimum lock-in period is six years).
The encashment is free for elderly citizens aged 60 and above. Although encashing before seven years for all age categories would incur a penalty of 50% of the last six months’ interest,

Besides RBI bonds, fixed deposits offered by reputable financing institutions like Bajaj Finance provide a secure way to invest for your long-term goals, with interest rates up to 8.85% p.a.

Bonds holding mode

Open the bond laser account for RBI bonds using the electronic form mode. However, after opening the account, the physical certificate will be dispatched to your address.


There are no tax relaxations for the account holders, as these Reserve Bank of India bonds are purely taxable under the Income Tax Act 1961. Whatever interest you earn, you need to show it during the Income Tax Return (ITR), which will be taxable based on your income.

Transferability, liquidity, and loans

There is no provision for bond transferability, and neither the bonds can be traded in a secondary market or used as collateral for the loan. RBI bonds are subject to transfer only in the event of the applicant’s death, and that too, with the nominee.


There is no restriction on the number of nominations for multiple RBI bond accounts. Ratios can be set according to your needs. Think of it as a buffet of options; you can select as many items as you like as long as you are within the set limits.

This flexibility allows you to adjust your investments depending on market conditions. Additionally, it ensures that you have a diversified portfolio and that your investments are not overexposed to any one type of investment.


RBI bonds are low-risk investment methods that are least affected by market fluctuations. Moreover, you can ensure guaranteed high-interest returns, subject to government benchmark rates. The change in interest will be notified to you beforehand. Although the fixed lock-in periods could overpower all other powers, RBI bonds provide a stable, long-term investment.

Furthermore, RBI bonds are considered highly safe investments because the government issues them.

Calculate your expected investment returns with the help of our investment calculators

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Frequently asked questions

Are RBI bonds a good investment?
RBI bonds are considered a safe investment option because the Government of India backs them, and they are least affected by market fluctuations.
Who is eligible for RBI bonds?
Any individual holding Indian nationality, including minors, is eligible for RBI‌ bonds.
Are RBI‌ bonds taxable?
Reserve Bank of India bonds are taxable and subject to the Income Tax Act of 1961. So, whatever interest you earn, you need to show it during your income tax return (ITR).
What happens to RBI bonds after maturity?
When RBI bonds reach maturity, you can claim the principal amount and any interest earned.
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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.