Congress leader P Chidambaram has lashed out at the Bharatiya Janata Party (BJP)-led government for discontinuing the Savings (Taxable) Bonds scheme.

"Government has dealt another blow to citizens who save, especially senior citizens. It has discontinued the 7.75 per cent RBI Bonds," Chidambaram said on Twitter.

"Government did this once before in Jan 2018. I protested vehemently. Next day they re-introduced the bond but reduced the interest rate from 8 per cent to 7.75 per cent. Effectively, after tax, the bond will yield only 4.4 per cent. That is now taken away. Why? I deplore this action," the former finance minister said in other tweets posted om the same matter.

The scheme, commonly known as RBI , is popular among retail investors who looking for safety of principal and a regular income.

"The Government of India, hereby notifies that the 7.75 per cent Savings (Taxable) Bonds, 2018...shall cease for subscription with effect from the close of banking business on Thursday, the 28th of May, 2020," said a notification on Wednesday.

The Reserve Bank of India too has notified the Cessation of 7.75 per cent Savings (Taxable) Bonds, 2018. Interest on the Bonds is taxable.

The Bonds are issued at par at Rs 100. The minimum subscription was fixed at Rs 1,000.

As per the scheme, the bonds are be repayable on the expiration of seven years from the date of issue.

The interest rate on bank fixed deposits as well as lending rates are on decline with the Reserve Bank of India lowering the key short-term lending (repo) rate. The repo rate is currently at historic low of 4 per cent.

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