Clarification on Charitable Institutions' Eligibility for 8% Savings Bonds
Current & verified — this is the latest version
Source: Reserve Bank of India · RBI/2004-05/432 · issued 25 Apr 2005 · ~1 min read
Quick answerRBI corrected an earlier circular: charitable institutions need a certificate under Section 80G OR Section 35(1)(ii)/(iii) of Income Tax Act to invest in 8% Savings (Taxable) Bonds, 2003, not both.
The rule, in the simplest words
Charitable institutions need a certificate under Section 80G OR Section 35(1)(ii)/(iii) of Income Tax Act to invest in 8% Savings (Taxable) Bonds, 2003.
Institutions need only one of these certificates to be eligible, not both.
Banks and authorized dealers must accept investment applications from charitable institutions holding either a Section 80G certificate or a Section 35(1)(ii)/(iii) certificate.
How it plays out — a real example
Rahul, an agency-banking (government business) officer in Indore, receives an investment application from a local charity. After verifying their Section 80G certificate, he confirms their eligibility for the 8% Savings (Taxable) Bonds, 2003 scheme and processes their application without delay.
What changed
The earlier circular dated April 7, 2005 used 'and' between Section 80G and Section 35(1)(ii)/(iii), implying institutions needed both certificates. This correction replaces 'and' with 'or', meaning institutions need only one of these certificates to be eligible.
What it means for you
Banks and authorized dealers must now accept investment applications from charitable institutions holding either a Section 80G certificate or a Section 35(1)(ii)/(iii) certificate, not both. This widens the eligible pool of investors for the 8% Savings (Taxable) Bonds, 2003 scheme, potentially increasing demand.
What you must do
Update internal eligibility checklists for 8% Savings Bonds to reflect 'OR' condition between Section 80G and Section 35(1)(ii)/(iii) certificates.
Re-verify any pending or rejected applications from charitable institutions that were declined due to the earlier 'AND' interpretation.
Communicate this correction to all relevant branches and investment processing teams handling bond subscriptions.
Who it affects
State Bank of India and associate banks, 17 nationalised banks, 4 private sector banks, SHCIL (Stock Holding Corporation of India Limited), Charitable institutions applying for 8% Savings (Taxable) Bonds, 2003
❓ Common questions
What changed in the eligibility criteria for charitable institutions?
The earlier circular required both Section 80G and Section 35(1)(ii)/(iii) certificates. This correction now requires only one of these certificates.
Does this affect investments already made under the earlier interpretation?
The circular does not address past investments. It only corrects the eligibility condition going forward. Banks should apply the corrected rule to new applications.
Which institutions are covered by Section 35(1)(ii)/(iii)?
These sections cover institutions approved for scientific research or social science research. The circular does not list specific institutions but refers to the Income Tax Act provisions.
📜 Read the original circular — full text as issued by RBI
RBI/2004-05/432
DGBA.CO.DT.No.13.01.299 /H. /2004-05
April 25, 2005
The Chairman/ Managing Director State Bank of India/Associate Banks/
17 Nationalised Banks/ 4 Private Sector Banks & SHCIL.
Dear Sir,
8% Savings (Taxable) Bond, 2003 – GOI Notification dated March 21, 2003 – Charitable Institutions – Clarification
Please refer to our Circular RBI/2005/415 DGBA.CO.DT.No.13.01.299 /H.8563-8609/2004-05 dated April 7, 2005 on the captioned subject. We advise that the concluding sentence of paragraph 2 of the above letter may please be read as, "only such institutions which have obtained Certificate under Section 80G or 35(1) (ii) or (iii) of Income Tax Act will be eligible for investment in 8% Savings (Taxable) Bonds, 2003 Scheme" instead of "only such institutions which have obtained Certificate under Section 80G and the 35(1) (ii) or (iii) of Income Tax Act will be eligible for investment in 8% Savings (Taxable) Bonds, 2003 Scheme".
2. Please acknowledge receipt.
Yours faithfully,
(D. Rajagopala Rao)
Deputy General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2004-05/432 · issued 25 Apr 2005. The plain-English explanation above is BankPulse’s own independent summary.
Communicate this correction to all relevant branches and investment processing teams handling bond subscriptions.
💻 IT / Systems
Re-verify any pending or rejected applications from charitable institutions that were declined due to the earlier 'AND' interpretation.
📜 Compliance
Update internal eligibility checklists for 8% Savings Bonds to reflect 'OR' condition between Section 80G and Section 35(1)(ii)/(iii) certificates.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (State Bank of India and associate banks, 17 nationalised banks, 4 private sector banks, SHCIL (Stock Holding Corporation of India Limited), Charitable institutions applying for 8% Savings (Taxable) Bonds, 2003), your first concrete step on “Clarification on Charitable Institutions' Eligibility for 8% Savings Bonds” is: “Update internal eligibility checklists for 8% Savings Bonds to reflect 'OR' condition between Section 80G and Section 35(1)(ii)/(iii) certificates.” (RBI issued this 25 Apr 2005).
Circular: RBI/2004-05/432 -- Clarification on Charitable Institutions' Eligibility for 8% Savings Bonds
Issued: 25 Apr 2005
Action required: Update internal eligibility checklists for 8% Savings Bonds to reflect 'OR' condition between Section 80G and Section 35(1)(ii)/(iii) certificates.
Action required: Re-verify any pending or rejected applications from charitable institutions that were declined due to the earlier 'AND' interpretation.
Action required: Communicate this correction to all relevant branches and investment processing teams handling bond subscriptions.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2210&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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