Inflation Indexed National Savings Securities‐ Cumulative, 2013

The Government of India will be issuing Inflation Indexed National Savings Securities-Cumulative, 2013. What are these ? Till now the deposits you used to keep with the banks and other financial instituitions will we having fixed rate of interest for a fixed tenure. They were not taking into account the Inflation factor into account. Now the government wants to give returns that is 1.5% above the rate of inflation. So you will be sure that you are beating inflation and getting a better return. Let us get to details of the offer;

1. The issue will be from December 23, 2013 to December 31, 2013. The Government of India reservers the right to close the issue earlier.

2. The issue will be in the form of Bonds.


3. The bonds may be invested by
a) An individual in his individual capacity, on joint basis, on anyone or survivor basis, on behalf of minor as father/mother/legal guardian
b) A HUF (Hindu Undivided Family)
c) “Charitable Institution” to mean a company registered under Section 25 of the Indian Companies Act 1956 OR an institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force OR any institution which has obtained a certificate from Income Tax Authority for the purposes of Section 80G of the Income Tax Act, 1961.
d) “University” means a university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be an University for the purpose of that act.

4. There is limit on investment. The minimum limit is Rs.5,000/- and maximum limit is Rs.5,00,000/- per applicant per year.

5. The interest on the Bonds will not get any tax benefit and hence is taxable under Income Tax Act, 1961 according to relevant tax status of the bond holders.

6. The bonds will be issued at par. Minimum amount of Rs.5000 (face value) and in multiples thereof.

7. The applications can be made in cash/draft/cheque/online through internet banking. The cheques and drafts should be in favour of the bank (receiving office) and payable at the place where the application is tendered.

8. The date of issue of bonds will be date of receipt of funds/realization of draft/cheque at the receiving office.

9. The bonds will be issued in the form of Bonds Ledger Account (BLA) and held with Reserve Bank of India. A certificate of holding in specified form will be issued to the holder of bonds.

10. The applications for the bonds in the form of Bonds Ledger Account will be received at
a) Branches of State Bank of India, Associate Banks, Nationalised Banks, three private sector banks (i.e. HDFC Bank Ltd., ICICI Bank Ltd., AXIS Bank Ltd.) and SHCIL during their working hours.
b) Any other bank or number of branches of the banks and SHCIL where the applications will be received as specified by the Reserve Bank of India in this behalf from time to time.

11. The nomination facility for the bond holders are available.
a) A sole holder or a sole surviving holder of a Bond(s), being an individual, may nominate in the Form annexed to this notification or as near thereto as may be, one or more persons who shall be entitled to the Bonds and the payment thereon in the event of his/her death.
b) Where any amount is payable to two or more nominees and either or any of them dies before such payment becomes due, the title to the Bonds shall rest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly. In the event of the nominee or nominees predeceasing the holder, the holder may make a fresh nomination.
c) No nomination shall be made in respect of the Bonds issued in the name of a minor.
d) A nomination made by a holder of Bonds may be varied by a fresh nomination as near thereto as may be, or may be cancelled by giving notice in writing to the Receiving Office in the Form annexed to the notification.
e) Every nomination and every cancellation or variation shall be registered at the Reserve Bank of India through the authorised bank and shall be effective from the date of such registration.
f) If the nominee is a minor, the holder of Bonds may appoint any person to receive the Bonds/amount due in the event of his/her death during the minority of the nominee.

12. The bonds shall be transferable to nominee (s) on the death of holder (only individual/s)

13. The bonds will bear interest at the rate of 1.5% (fixed rate) per annum + inflation rate calculated with respect to final combined Consumer Price Index [(CPI) Base; 2010 = 100]. Final combined CPI will be used with a lag of three months to calculate incremental inflation rate (i.e. final combined CPI for September would be used as reference CPI for all days of December). Interest will be compounded with half‐yearly rests and will be payable on maturity along with the principal.

14. The bonds are not traded in secondary market. The good point is that the bonds can be kept as collateral with the banks to get loans frombanks, Financial Institutions and Non‐Banking Financial Company (NBFC). The lien to that effect will be marked in the depository (RBI) by the authorised banks.

15. The bonds are repayable on expiration of 10 years from the date of issue. The investor will be advised by the authorised bank one month before maturity regarding the ensuing maturity of Bonds advising them to provide a Letter of Acquaintance, confirming the NEFT/NECS account details, etc. to the authorised bank. If everything is in order, the investor will be paid within maximum five days of the maturity.

16. Premature repayment/redemption before the maturity date is allowed after one year of holding from the date of issue for senior citizens, i.e. 65 and above years of age and for all others, after 3 (three) years of holding, subject to the penalty charges at the rate of 50% of the last coupon payable. Early redemption to be allowed only on coupon date.

Your Credit Card dues and NPA status

The Reserve Bank of India in its notification dated 20th December 2013 has advised that a credit card account will be treated as NPA (Non-Performing Asset) if the minimum amount due as mentioned in the credit card statement for the month is not paid fully within 90 days from the next statement date. It has also clarified that the gap between the two statements should not be more than a month.