What is meaning of government bonds and RBI bonds etc ? What do I have to do to invest in it ? Is the returns?

Question

What is meaning of government bonds and RBI bonds etc ? What do I have to do to invest in it ? Is the returns?

Answer 1

Savings Bonds are issued by RBI on behalf of Government of India.  These Bonds are held in electronic form in an account called Bond Ledger Account.  

Many agents have been identified and authorized by the RBI for this.  You can consider any of these agents for subscribing to these bonds.

Answer 2

Bonds refer to the statements of debt. It is a promise to repay money borrowed after a perticular period of time with certain rate of interest. The issuer is equivalent to the borrower and the bond holder to the lender. Bonds enable the issuer to finance long-term investments with external funds.

Government bonds refer to the bonds issued by the Government or the government department of a country in its own currency. The money raised from the bonds maybe used to finance various activities like building roads, hospitals, infrastructure etc.

RBI bonds refer to the bonds issued by Reserve Bank of India. The money rased may be used to finance its various projects like long term lending, development of the economy etc.

Investing in bonds is different from investing in shares. The bonds are traded more on over the counter basis than on the stock market. Usually the Govt and RBI bonds are available in designated branches of banks and post offices. They may be procured to a broker too. You will have to fill in a form and apply for the bonds. Usualy one bond is worth 1000 rupess and if you want to invest above 50,000.00 you will have to submit a PAN card. Once you fill the form and submitt it you will recive a bond certificate in your name.

The returns depend on the type of the bond! Some have a fixed rate of interest, say 8%, and some are linked to the market or the inflation in the country. That means the interest maybe 4% plus the fluctuations to the parameter to which it is linked. The returns maybe paid out to you in the form of a demand draft or maybe a direct credit to your bank account.

ok?     :)

Answer 3

A government bond is a bond issued by a national government denominated in the country's own currency. Bonds issued by national governments in foreign currencies are normally referred to as sovereign bonds.

Government bonds are usually referred to as risk-free bonds, because the government can raise taxes or simply print more money to redeem the bond at maturity. Some counter examples do exist where a government has defaulted on its domestic currency debt, such as Russia in 1998 (the "ruble crisis"), though this is very rare.

the RBI Bonds that we are talking about offers a decent eight per cent return completely tax-free. Its tenure is for five years. (There is also a new series of RBI Bonds that offers seven per cent on a six-year tenure). There is almost nil risk of default with RBI Bonds (unless, of course, the Government of India goes bankrupt).

The minimum investment in RBI Bonds is Rs 1,000 and the maximum Rs 2 lakh per individual per year (365 days from the day you first invest in the bond; it does not refer to calendar or financial year). However, there is no upper limit if you are investing your retirement benefits or VRS booty. You may invest any amount you like, as long as your employer certifies that the money is out of your VRS or retirement proceeds.

RBI Bonds are sold at RBI branches and through a number of commercial bank branches. Check with your bank. They may be selling it.