Your fixed-income journey just got tougher with the halting of the last government bond carrying high interest. The Reserve Bank of India (RBI) released a notification last week announcing it was stopping the government of India 7.75% (taxable) bonds, known as the RBI 7.75% bonds. “A surge in demand in this relatively high interest rate instrument due to rate cuts in other government savings products may have prompted the stoppage.
The 7.75% bonds were a relatively costly way of government borrowing," said Nithin Sasikumar, co-founder, Investography, a financial planning firm. “As had happened with a previous instance of discontinuation of these bonds, the government may issue fresh bonds at a lower interest rate," he added.