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Definition: Canada Savings Bond
The Canada Savings Bond (CSB) is a savings instrument issued by the Bank of Canada. It is a debenture form of an instrument. It is guaranteed by the Bank. Initially, CSBs were issued using Registered Retirement Savings Plan, Registered Retirement Income Fund and Payroll Savings Program. The bonds are available for purchase only by Payroll Savings Program from 2012.
The above figure shows the format before 2012 revision.
After the change in 2012, the format was revised as follows:
There are two types of CSBs. They are:
a. Canada Savings Bond (CSB)
They can be redeemed at any time of the year and have a maturity after three years. The interest rate for the first year is defined initially and for the remaining periods, the rates are disclosed later based on the current market conditions.
b. Canada Premium Bond (CPB)
It can be bought through financial institutions and dealers. It is also fully guaranteed by the Government of Canada and can be redeemed at any time.
The difference between CSB and CPB is that while redemption, the current period’s interest rate will be forfeited in CPB and only interest earned till the previous year would be given. This is not the case in CSB.
Redemption of the Bond
• The bonds can be redeemed through CSB Online services and only for those who are enrolled in the Payroll Savings Program.
• Once redeemed, the full face value of the bond is given along with the applicable interest rate from the issued date to the redemption date
CSBs are issued between October and December every year.