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What are the options available regarding the interest payment on RBI Bond?

Option A - Interest payable half-yearly:

• Promissory Notes:
  Under this option an investor will get interest at the rate of 8.5% per annum payable at half yearly intervals from the date of issue of bond in terms of sub-paragraph (I) of paragraph (5) above. The interest will be paid from the date of issue of bonds upto 30th June/31st December as the case may be and thereafter half yearly on 30th June and 31st December by means of post dated interest warrants sent to the investor in advance alongwith the Promissory Note. The interest warrants would be valid for three months from the date of issue.
  
• Bond Ledger Account:
  In case of Bond Ledger Account, by credit to the Bank account of the holder or by interest warrants or cheques.
  

Option B - Cumulative interest payable on maturity:

Under this option interest at the rate of 8.5% per annum would be compounded with half yearly rests and will be payable to the investor on maturity alongwith the principal. Further interest at the rate of 8.5% per annum shall be payable to such of the investors who do not encash their bonds on the expiry of 5 years from the date of their issue, at half yearly intervals or compounded with half yearly rests, as the case may be. Such interest would be payable from the date of maturity till the time the bonds are redeemed.

Source : DWT