'Another cruel blow': Chidambaram slams govt for withdrawing RBI Bonds scheme

Former Finance Minister P Chidambaram on Thursday said that the government has given another "cruel blow" to the citizens by discontinuing the RBI Bonds scheme. Chidambaram also urged the people to demand the government that the scheme be immediately restored. "After lowering the interest rates in PPF and small savings instruments, the abolition of the RBI Bond is another cruel blow, All citizens must demand that the RBI Bond must be restored immediately, " he tweeted on Wednesday.

"Every government is bound to provide at least one safe, risk-free investment option to its citizens. It was the RBI bond since 2003," the veteran Congress leader said.

Chidambaram said the government did this once before in January 2018. "I protested vehemently. Next day they re-introduced the bond but reduced the interest rate from 8 percent to 7.75 percent," he noted. He said effectively, after tax, the bond will yield only 4.4 percent. "That is now taken away. Why? I deplore this action," he added.

The Reserve Bank of India (RBI) on Wednesday notified that the government has decided to withdraw the 7.75 per cent Savings (Taxable) Bonds scheme from the close of banking business on Thursday due to declining interest rates. The scheme is popular among retail investors looking for safety of principal and a regular income.

"The Government of India (GoI), dated May 27, 2020, hereby announces that 7.75% Savings (Taxable) Bonds, 2018 shall cease for subscription with effect from the close of banking business on Thursday, the 28th of May 2020," RBI said in a notification on Wednesday.

A few days back, Chidambaram had rejected the government's Rs 21 lakh crore economic package announced to revive the economy. He had then said that sooner than later the government will have to accept the suggestions made by the Congress.

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