The Reserve Bank of India (RBI) has said the interest rate for its Floating Rate Savings Bonds 2020 (Taxable) will be 8.05 per cent for July-December 2024.
“In terms of Para 13 (ii) of Government of India Notification F.No.4(10)- B(W&M)/2020 dated June 26, 2020 on Floating Rate Savings Bonds, 2020 (Taxable)- FRSB 2020 (T), the coupon/interest rate of the bond would be reset half yearly, starting with January 01, 2021 and the coupon/interest rate will be set at a spread of (+) 35 bps over the prevailing National Savings Certificate (NSC) rate,” said the RBI in press statement dated July 1.
“Accordingly, the coupon rate on FRSB 2020 (T) for the period July 01, 2024 to December 31, 2024 and payable on January 1, 2025 remains at 8.05 per cent (7.70 per cent+0.35 per cent), unchanged from the previous half-year.” it said.
What is RBI Floating Rate Savings Bond
The RBI Floating Rate Savings Bonds 2020 (Taxable) are a type of government bond that offers a floating interest rate. Its key features are:
RBI Floating Rate Savings Bonds 2020 (Taxable) have a seven-year lock-in period.
The interest rate on these bonds is reset twice a year, with investors receiving interest payments semi-annually on January 1 and July 1.
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The RBI floating rate savings bond has a minimum subscription amount of Rs 1,000 and in multiples of Rs 1,000, thereafter.
There is no maximum investment limit.
The interest earned is taxable, and no tax deduction can be claimed for investing in these bonds.
Premature withdrawal is generally not allowed, except for senior citizens who can withdraw early with a penalty after a minimum lock-in period.
The lock-in period depends on age: six years for those aged 60 to 70, five years for those aged 70 to 80, and four years for those over 80.
Who should invest in RBI Floating Rate Savings Bonds
RBI Floating Rate Savings Bonds are a good option for investors who:
Seek a secure investment with sovereign guarantee on both principal and interest.
Prefer a fixed-income investment over equity-linked investments.
Can lock in their money for the 7-year maturity period.
Want higher returns compared to bank fixed deposits.
How to buy RBI Floating Rate Bond
You can apply either online or offline.
In the online procedure, you can apply for FRSBs on your bank’s official website.
In the offline procedure, you can visit your bank branch.
Complete the application form by providing all the necessary information and documents.
After filling out the form, deposit the required amount by cash or cheque at the designated branch.
First Published: Jul 02 2024 | 1:19 PM IST