How 8% govt bonds have made a comeback after 5 years

The cut in small savings deposit rates has brought 8 per cent government of India bonds back in flavour.

In a move to align the short term savings interest rates with market rates, the government on March 18, 2016 cut interest rate on kisan vikas patra to 7.8 per cent from 8.7 per cent.

Also, returns from post office term deposits of one, two and three years which command an interest rate of 8.4 per cent have been revised. Now, a 1-year Time Deposit will get 7.1 per cent, 2-year Time Deposit will earn 7.2 per cent and 3-Year Time Deposit will attract interest of 7.4 per cent.

All the above changes which came into effect from April 1, 2016 have made 8 per cent government of India taxable savings bonds more attractive for investors.

According to an Economic Times report, these government bonds were out of flavour during the last five years but with recent cut in interest rates of small savings schemes, investors have started locking their money in these bonds.

There is no maximum limit for investment in these bonds which have a maturity period of six years.