What changed
RBI issued detailed operational guidelines for the repayment of 8% Relief Bonds, 2002, which mature from March 1, 2007. Banks are now required to send advance maturity notices, verify PAN details for large repayments, and adjust any excess interest paid on investments exceeding the ₹2 lakh annual limit.
What it means for you
Agency banks must proactively manage the repayment process to avoid delays and ensure compliance with investment limits. Banks need to recover or adjust interest paid on excess investments above ₹2 lakh per investor per annum, and no post-maturity interest applies. This impacts cash flow planning and operational workload at designated branches.
What you must do
- Send maturity advices to investors one month before due date via registered/speed post, highlighting no post-maturity interest.
- Collect PAN/GIR number or Form 60 for repayments exceeding ₹1 lakh.
- Verify investments against the ₹2 lakh per investor per annum limit and recover/adjust excess interest paid.
- Ensure repayment is made only on the due date (or previous working day if holiday) and update BLA records with closure details.
Who it affects
State Bank of India & Associate Banks, Nationalised Banks, HDFC Bank Ltd., ICICI Bank Ltd., IDBI Ltd., UTI Bank Ltd., Stock Holding Corporation of India Ltd., Designated branches handling 8% Relief Bonds, 2002
What is the maximum investment limit per investor per annum for these bonds?
The Government of India set a maximum limit of ₹2 lakh per investor per annum, with certain exceptions for retiring employees. Banks must ensure no interest is paid on excess investments and recover any interest already paid on non-cumulative bonds from the principal at repayment.
Is post-maturity interest applicable on these bonds?
No, post-maturity interest was withdrawn by the Government vide Notification No. F. 4 (5)-W & M / 2002 dated February 28, 2003. Banks must prominently inform investors that no post-maturity interest is payable.
What documents are needed for repayment?
Investors must submit a stamped receipt in the prescribed format (Annexure IA) as discharge. For repayments over ₹1 lakh, PAN/GIR number or Form 60 is required. The Certificate of Holding (COH) is not mandatory for discharge if multiple investments are on it.