Institutions which could get this role include Stock Holding Corporation of India Ltd (SHCIL) or the State Bank of India (SBI), though theres no confirmation of that yet. The other option may be that the agencies, which are currently acting as RBIs sub-agents for distributing the savings bond, will manage them with a centralised reporting and reimbursement system, a senior RBI official told FE.
RBI is evaluating all the options and also discussing the issue with the government, the official said.
According to legal experts, this may require an amendment to the RBI Act, 1934, to take away the mandatory nature of management of public debt by the RBI and vest the discretion with the government to undertake the management of the public debt by itself or to assign it to some other agency.
The Relief Bond Scheme was introduced in 1987 to enable the government to fight the then prevalent unprecedented drought. The scheme was scheduled to go off the counter the following year. However, due to its rising popularity, the scheme was extended and the word drought was omitted.
The interest rate on relief bonds, which were renamed subsequently as savings bonds, was reduced gradually over the years and the tax benefits were withdrawn. At present, there is only one type of savings bond i.e. taxable bonds with a term of six years and interest of 8 per cent payable half yearly. The government recently announced withdrawal of 6.5 per cent Savings Bond (Non-Taxable).
The RBI has already stopped distributing this eight per cent Savings (Taxable) Bonds and only agency banks and SHCIL can distribute them and hold them in the Bond Ledger Account. The agencies are
SBI and its seven associate banks, 14 nationalised banks, four private sector banks and SHCIL.
RBI mobilised Rs 10,000-15,000 crore through these saving bonds schemes in the previous fiscal.
However, mobilisation through issuance of the bonds may be impacted for the current fiscal with the withdrawal of the 6.5 per cent tax-free savings bonds, said a banker.