The Finance Ministry on Monday said it will close subscription of eight percent Government Savings (Taxable) Bonds, 2003, with effect from Tuesday.

In 2003, the government came out with bonds offering 8 percent interest to encourage retail investors to invest.

The bond was open for subscription April 21, 2003, and had a fixed tenure of 6 years. There was no upper limit for investment.

"The Government of India (GoI) announced here today that 8% GOI Savings (Taxable) Bonds, 2003 shall cease for subscription with effect from the close of banking business on January 2, 2018," the Finance Ministry said in a statement.

The decision to discontinue the bond comes in the backdrop of declining interest rate in other saving instruments, especially the Post Office small saving schemes.

Last week the finance ministry had reduced interest rate on various small saving schemes by 0.2 per cent.

Following the reduction, term deposits of 1-5 years will fetch a lower interest rate of 6.6-7.4 percent, to be paid quarterly, while the five-year recurring deposit interest is pegged at 6.9 percent.