Mumbai: The Reserve Bank today allowed few classes of savings bond holders to raise funds by pledging them as collaterals with scheduled banks.

RBI said that 2002 savings bond with 7 per cent coupon rate, 2003 savings bond (non-taxable) with 6.5 per cent coupon rate and 2003 savings bonds (taxable) with 8 per cent coupon rate are admissible as collaterals for loans from banks and financial institutions including non-banking finance companies.

"The holders of the said bonds will be entitled to create, pledge or hypothecation or lien in favour of scheduled banks in accordance with the Government Securities Act," RBI said in a statement issued here today.

Earlier, savings bonds were not eligible as collateral for loans from banks, financial institutions and non-banking financial companies.

The RBI notification further said that the collateral facility will be available for loans extended to the bond holders only and not for third-party loans.

The decision follows the assurance given by the government that it will take measures to inject more liquidity into the system.
Source : PTI