RBI Floating Rate Bonds

RBI Floating Rate Savings Bond (FRSB) 2020 (Taxable) is a central government-backed scheme. It is a non-tradable bond designed for Resident Indians and Hindu Undivided Families (HUFs) only. The interest rate of the bond is paid semi-annually, with a resetting of the coupon rate every 1 January and 1 July. Further, the coupon rate of the bond is linked to the National Savings Certificate (NSC) rate with a spread of 0.35%. It has a maturity period and lock-in period of 7 years.

The current coupon rate (1 January 2026 to 30 June 2026) or the interest rate of the RBI floating rate bond is 8.05% p.a., which is linked to the National Savings Certificate (NSC) rate with a spread of 0.35%. In simpler terms, the interest rate of the RBI Bond is calculated as 7.70%+0.35%. The bond has a maturity period and lock-in period of 7 years.

The interest payment would be payable on 1 July 2026 electronically by credit to the bondholder’s bank account as per the details provided. The coupon or the interest rate of the bond is reset half yearly (in sync with the coupon payment date) on every 1st July and 1st January. The coupon rate is linked with the prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate.

Eligibility for Investment

RBI Floating Rate Bonds are eligible for -

However, NRIs are not eligible to invest in FRSB.

Investment Limits

Form of Bonds

Transferability

RBI FRSBs are not transferable and hence, cannot be traded on stock exchanges. However, transfer is allowed to the nominee(s)/legal heir in case of the death of the bondholder.

Other Features

Investors can buy RBI Floating Rate Bonds through both online and offline routes.

Online Process

Retail direct investors can buy FRSB 2020 (T) by opening a Bond Ledger Account through the RBI Retail Direct portal. The bonds cannot be subscribed to on Sundays, non-working Saturdays and public holidays. The certificate of holding will be sent to the investor’s email address as per the information provided while opening BLA.

Offline Process

The application form of RBI Floating Rate Bonds is available at designated branches of SBI, 11 nationalised banks and 4 private sector banks. The investment process includes submitting an application, providing address proof and PAN details and bank account information, with interest paid directly to the linked bank account.

Premature withdrawal of RBI Floating Rate Bonds is allowed for senior citizen investors. The investor should be aged 60 years and above and submit a valid age proof to the issuing bank. A penalty is levied for premature withdrawal of RBI Savings Bonds. Investors opting for early withdrawal will be charged a penalty equal to 50% of the last coupon payment.

The minimum lock-in period of the bond varies by age group as follows:

RBI FRSB Bonds are best suited for:-

Income from RBI Floating Rate Bonds is taxable. Further, TDS will be deducted on the annual interest (if it exceeds Rs 10,000) received from these bonds. Investors should consider the implications of tax on bonds before investing to calculate post-tax yield returns.