RBI Floating Rate Savings Bonds
RBI Floating Rate Savings Bonds

Now You Can Buy RBI Floating Rate Savings Bonds Through Its Retail Direct Portal. Learn More

Investors can open a retail direct gilt account online and invest in Floating Rate Savings Bonds (FRSBs), which offer 8.05 per cent interest bi-annually.

The Reserve Bank, on October 23, 2023, said retail investors can now subscribe to Floating Rate Savings Bonds, 2020 (Taxable) through its retail direct portal.

"In its endeavour to expand the basket of products offered through the Retail Direct Portal, Reserve Bank of India, in consultation with the Government of India, has enabled subscription to Floating Rate Savings Bonds, 2020 (Taxable) – FRSB 2020 (T)," the central bank said in a statement.

RBI-Retail Direct Scheme

Under the RBI-Retail Direct Scheme, launched in 2021, individual investors can open a Retail Direct Gilt account online, simplifying investments in government securities in both primary and secondary markets.

Earlier, retail investors were allowed to invest in central government securities, treasury bills, state government securities and sovereign gold bonds through the Retail Direct portal. Now, FRSB 2020(T) can also be invested in by opening a Bond Ledger account through the portal. Payments can be made using net banking or UPI from a linked bank account.

FRSB

FRSBs are interest-bearing, non-tradable bonds issued by the central government with a maturity of seven years. The current interest rate stands at 8.05 per cent, adjusted biannually, based on the prevailing National Saving Certificate (NSC) rate with a spread of 35 bps over the respective NSC rate. Historically, the government has never lowered NSC rates, potentially offering higher yields from FRSBs in the future.

The minimum investment is Rs 1,000. There's no maximum investment limit, but interest earned is taxable as per the tax slab. Premature encashment is allowed for investors aged 60 and above, subject to a minimum lock-in period ranging from four to six years, depending on the investor's age bracket. The lock-in period for investors in the age bracket of 60 to 70 years shall be six years from the date of issue.

Floating Rate Savings Bonds are not tradable in the secondary market and cannot be used as collateral for loans from banks, financial institutions, or non-banking financial companies. FRSBs offer a great investment opportunity.

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