Government & Sovereign Bonds

RBI Floating Rate Savings Bonds

A 7-year Government of India bond whose interest resets every six months, staying 0.35% above the NSC rate.

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Tenure7 years

Tenure: 7 years
Interest rate: NSC rate + 0.35%
Interest paid: Half-yearly, 1 Jan & 1 Jul
Investment: From ₹1,000; no upper limit

What are RBI Floating Rate Savings Bonds?

The Floating Rate Savings Bonds, 2020 (Taxable) are issued by the Government of India and sold through the RBI's agency banks. They opened in July 2020, replacing the 7.75% Savings (Taxable) Bonds, which paid one fixed rate for their whole term.

The idea is simple. Instead of locking you into a single rate for seven years, the bond's interest is linked to the National Savings Certificate (NSC) rate and adjusts every six months. When small-savings rates go up, your income goes up with them; when they come down, so does your income.

How the floating rate works

The Ministry of Finance reviews small-savings rates every quarter. The FRSB rate for each half-year is set at the NSC rate then prevailing plus 0.35 percentage points, and applies from 1 January and 1 July.

An illustrative example: suppose the NSC rate is 7.5%. The FRSB would then pay 7.85% a year for that half-year, so ₹10 lakh earns about ₹39,250 every six months. If the NSC rate moves to 7% at the next reset, the coupon becomes 7.35%, or ₹36,750 for that half-year. These numbers are illustrative only.

Because there is no cumulative option, the bonds are designed to pay income rather than to compound.

Who should consider FRSB

Retirees who want a predictable flow of half-yearly income backed by the government
Conservative investors who don't want to guess the direction of interest rates
Investors in the nil or lower tax slabs, where a taxable coupon hurts less

They may suit you less if you are in the 30% slab, want to be able to sell on the market, or are under 60 and might need the money within seven years.

Things to compare before you invest

Point	What to check
Post-tax yield	The current coupon after your slab rate
Liquidity	Whether you can wait 7 years, or qualify for the senior-citizen exit
Rate direction	FRSB moves with NSC; a fixed-rate product locks in today's rate
Payout frequency	Half-yearly credits vs monthly or quarterly income elsewhere
Concentration	How much of your fixed income sits in one locked product

Our team can set these side by side for you and handle the application paperwork with an agency bank.

Who is it for?

Retirees and conservative savers who want regular income with sovereign backing
Investors who would rather let the rate adjust than lock in one fixed rate for seven years
People in the nil or lower tax slabs, since the interest is fully taxable
Senior citizens who value an age-based early exit option

Key features

Government of India backing

The bonds are issued by the Government of India and sold through the RBI's agency banks, so principal and interest carry sovereign backing.

Rate that resets twice a year

The coupon is reset every six months, from 1 January and 1 July, at 0.35 percentage points above the National Savings Certificate rate prevailing then.

Built for income

Interest is paid out every six months to your bank account. There is no cumulative option where interest is added back to the bond.

No upper investment limit

You invest from ₹1,000 in multiples of ₹1,000 with no maximum, which suits larger lump sums such as retirement benefits.

Electronic holding

Bonds are held only in electronic form in a Bond Ledger Account. They cannot be traded or pledged, and pass only to a nominee or legal heir.

How Ramasure helps

1
Understand your income needs
Your relationship manager looks at the income you need, your tax slab and whether you might need the money before seven years.
2
Compare fixed-income choices
We place FRSB alongside bank and corporate FDs, other government schemes and debt funds, so you can see the trade-offs on rate, liquidity and tax.
3
Application with an agency bank
We help you fill the application, attach KYC and nominee details, and submit it with a designated agency bank so the bonds are credited to your Bond Ledger Account.
4
Track resets and payouts
We help you keep track of half-yearly rate resets, interest credits and, for senior citizens, the date from which early exit becomes possible.

Documents & eligibility

Documents you'll need

PAN card
Aadhaar or other officially valid address proof
Cancelled cheque for the bank account that will receive interest
Recent photograph, if the agency bank asks for one
Nominee details
Age proof, for senior citizens who may use early exit

Eligibility

Resident individuals, singly or jointly
Hindu Undivided Families (HUFs)
Minors through a parent or guardian
NRIs are not eligible

Costs and risks to understand

Costs to check

Bonds are issued at face value in multiples of ₹1,000
Early exit, where allowed for senior citizens, costs 50% of the interest for the last six months
Interest is taxed at your slab rate, and TDS applies as per income-tax rules
Opportunity cost of locking money for seven years if you are under 60

Risks & things to know

If the NSC rate is cut, your interest is reset lower from the next reset date
No premature exit for investors under 60, and the bonds cannot be sold, transferred or pledged
Fully taxable interest reduces the post-tax yield for those in higher slabs
Interest is paid out, not compounded, so payouts must be reinvested separately if you want growth

Frequently asked questions

Yes, after a minimum holding period that depends on age: 6 years for those aged 60 to 70, 5 years for 70 to 80, and 4 years for 80 and above. Half of the interest for the last six months is deducted as a penalty. Investors under 60 must hold till maturity.

The rate is announced for each half-year and equals the NSC rate for that period plus 0.35%. Check the latest rate on the RBI website or with the agency bank before investing, since it can change from 1 January and 1 July.

Yes, the agency bank deducts TDS as per income-tax rules. If your total income is below the taxable limit, you may be able to submit Form 15G or 15H to avoid the deduction. Either way, report the interest in your return.

An FD has a fixed rate for its term and is covered by DICGC insurance up to ₹5 lakh per depositor per bank, while FRSB carries sovereign backing and a rate that resets every six months. FDs usually allow premature withdrawal; FRSB does not, except for eligible senior citizens.

Important information

Bonds, debentures and corporate fixed deposits carry credit and default risk. Review the credit rating and offer documents before investing.
Bank deposits are covered by deposit insurance up to the limit prescribed by law; corporate deposits and bonds are not covered.
Prices of listed bonds may move with interest rates, and liquidity in the secondary market may be limited.

Read all disclosures

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