Scrapping RBI Bonds cruel blow to investors: Chidambaram

Former Finance Minister P Chidambaram on Thursday slammed the Modi government for giving a “cruel blow” to the people by discontinuing the popular RBI Bonds scheme and demanded immediate restoration of the same.

“Every government is bound to provide at least one safe, risk-free investment option to its citizens. It was the RBI bond since 2003,” Chidambaram said.

“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 said.

He pointed out that the Modi government had discontinued the RBI Bonds scheme in January 2018, but re-introduced it the next day at a reduced interest rate.

“I protested vehemently. Next day they re-introduced the bond but reduced the interest rate from 8 per cent to 7.75 per cent,” the senior Congress leader said.

Chidambaram said effectively, after tax, the bond will yield only 4.4 per cent. “That is now taken away. Why? I deplore this action,” he said.

The scheme was popular among retail investors looking for steady returns with minimal risk. It assured them a higher annual interest than what money in savings bank accounts, or even small savings schemes would typically earn.