On 29th April 2024, The Reserve Bank of India(RBI) has announced an 8% interest rate on the Floating Rate Savings Bond (FRSB) 2034. It is a special type of bond issued by Government of India (GoI) that matures in 2034.
- This is a variable rate bond as the interest rate will change after every 6 months.
Key Points about FRSB:
i.The interest rate is based on the average yield of recent auctions for short-term government debt i.e. Treasury Bills. The interest rate depends on the market conditions.
ii.Interest on these bonds is paid semi-annually i.e. first installment of interest paid on 1st January and second installment on 1st July of every year, with no provision for cumulative interest payments.
iii.FRSBs have a maturity period of 7 years.
iv.Minimum investment amount for FRSBs is Rs 1000 and there is no limit on maximum amount.
Note: Interest Rate on FRSB will be 8%(from 30th April, 2024 to 29th October, 2024).
- This rate is calculated by taking an average of the interest rates from the previous 3 auctions of short-term government debt with a marginal addition of a fixed amount (0.98%).
Benefits:
i.These FRSBs ensures security to investors as these bonds are supported by Government of India(GoI).
ii.FRSBs provide flexibility as interest rate of the benchmark increases, the interest rate for FRSBs also increases.
RBI Cancels CoR of Acemoney(India)Limited Over Irregular Lending Practices
The Reserve Bank of India(RBI)in exercise of powers conferred on it under Section 45-IA(6) of the RBI Act, 1934 has cancelled the Certificate of Registration(CoR) of Delhi-based Non-Banking Financial Company(NBFC) Acemoney (India) Limited over irregularities in lending practices.
- As per RBI order, Acemoney(India) Limited is barred from transacting the business of a Non-Banking Financial Institution(NBFI), as defined in clause (a) of Section 45-I of the RBI Act, 1934.
Key Points:
i.The licence of the Acemoney(India) Limited has been cancelled due to the violation of RBI guidelines on managing risks and code of conduct in outsourcing financial services in its digital lending operations undertaken through 3rd- party apps.
ii.It was also not compliant with the extant regulations pertaining to charging of excessive interest and ensuring confidentiality of customer information.
About Acemoney(India) Limited:
It is a financial services company that was incorporated in 2016. It provides various fee-based services to its clients. It disburses loans and advances to customers in partnership with digital platforms.
- It has partnership with digital lending apps: ActLoan, AgMoney, NiceCash, CashLender, among others.
Note: The company received its Certification of Registration(CoR) to work as NBFC by RBI in February, 2017.
About Reserve Bank of India(RBI):
Governor: Shaktikanta Das(25th Governor of RBI)
Headquarter: Mumbai, Maharashtra
Established: 1 April, 1935
