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RBI Floating Rate Savings Bonds – FRSB 2020

Government of India has vided Notification F.No.4(28)-(W&M)/2017 dated May 27, 2020 announced that the 7.75 percent Savings (Taxable) Bonds, 2018 shall cease for subscription with effect from the close of business on Thursday, the 28th of May, 2020.

Now, the Government of India has decided to launch the Floating Rate Savings Bonds 2020 (Taxable) scheme, with effect from July 01, 2020.

Savings bonds are usually looked at as safe and secure investments as the national government backs their returns.

As these bonds are sovereign, payment is guaranteed at half-yearly intervals.

The Central Government is fully backing up this scheme and this is the reason why the investors with a less-risk appetite should be aware of this type of investment.

What is RBI Floating Rate Saving bond (FRSB)?

This bond has a floating interest rate. It is linked with the existing National Savings Certificate Scheme. The Interest rate of this FRSB is NSC Interest rate Plus 35bps.

The Present interest rate of NSC scheme is 6.8% so FRSB Interest rate is 6.8% + 0.35% = 7.15%.

Know the Post office Small Saving Schemes – Current Interest Rates

With maturity at 7years, the Investors receive constant interest income every 6 months.

Who can invest?

  • An Individual Citizen of India
  • A joint account also be opened
  • Indian Parents can open in the name of their minor children with a nominee registered.
  • HUF (Hindu Undivided Family)
  • NRIs are NOT ELIGIBLE to invest in these bonds.

How long one has to invest?

The maturity period is 7 years from the date of the issue.

Is there any Limit of investment?

The minimum permissible investment for this Bonds is Rs. 1000/- and in multiples of Rs. 1000/- thereof. However, there is is no maximum limit of investment.

The applications must be submitted with the necessary payment in the form of Net-banking/ cash (up to ₹20,000/- only) / cheque/ draft.

Where to buy these bonds?

Any branches of SBI and 11 other Public Sector banks, 4 Private sector banks ( ICICI, HDFC, Axis, and IDBI) will accept the application for these bonds. The mode of application shall be made online or offline.

The bonds will be issued only in electronic form and held at the credit of the account holder in an account called Bond Ledger Account, opened with the Receiving Office. 

What are the type of Payout options available?

  • Non-Cumulative
  • The cumulative option is not available in this FRSB.

In the case of a non-cumulative option, interest is payable on a half-yearly basis.

Half-yearly interest is payable on 1st January / 1st July. Bank account details to be filled correctly to facilitate the interest payment and maturity payment directly to the account.

Are the interests Taxable?

The income from these bonds is taxable as per the investor’s tax slab under the Income Tax Act of 1961. The tax will be deducted at source (TDS) while the interest is paid.

No income tax exemption available under section 80C.

Premature Closure

Premature closure option is available for the investors as per their age bracket.

The facility is available to the eligible investors after the Lock-in period of 4, 5 and 6 years from the date of issue in the age bracket of 80 years and above, between 70 to 80 years and 60 to 70 years respectively.

Loan Eligibility

These bonds are not eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.

What happens in the event of the death of the bondholder?

It is mandatory to nominee a person through Form-C and Form-D while applying for the bond. The sole Holder or all the joint holders may nominate one or more persons as a nominee. The nominated person or persons shall be entitled to the ownership as well as any payment due on the bond.

These Bonds are not transferable and not traded in the secondary market.

To know more and download Forms, read RBI Notification: Read here.


With lower interest rates in the savings account, this RBI FRSB will be good for the retirement people. (It does not have any upper limit). whereas Senior Citizen Saving Scheme has the limit of 15lakhs and Pradhan Mantri Vaya Vandana Yojana Scheme also has the limit of 15 Lakhs.

Overall, for those who are looking to receive Interest on the deposits where their Principal amount is not required for 7 years, this FRSB bond is an exceptionally suitable and money-making option in today’s fluctuating Interest rates market.

Happy Investing.

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