Floating Rate Savings Bonds, 2020 (Taxable)
Floating Rate Savings Bonds, 2020 (Taxable), are savings bonds issued by the Government of India and administered through the Reserve Bank of India (RBI). These bonds are designed for investors seeking regular interest income and the security of a government-backed investment instrument.
The interest rate on Floating Rate Savings Bonds, 2020 (Taxable), is 8.05% per annum for the period from 1 July 2026 to 31 December 2026. The interest rate is linked to the prevailing National Savings Certificate (NSC) rate, with an additional spread of 0.35%. The rate is reset every six months, so the interest rate applicable in future periods may change.
Interest is paid semi-annually on 1 January and 1 July each year. The bonds do not offer a cumulative interest option, meaning that interest is paid directly to the investor rather than reinvested into the bond.
Government-Backed Investment: These bonds are issued by the Government of India through the Reserve Bank of India. They offer sovereign backing, making them an option for investors who prefer government-backed securities for their savings.
Regular Interest Income: Investors receive interest payments every six months. This feature may be useful for individuals who require periodic income from their investments, including retirees and investors seeking a regular cash flow.
Floating Interest Rate: The interest rate is linked to the prevailing NSC rate and is reset every six months. This means the interest income may increase or decrease as the applicable rate changes. Future interest rates are not guaranteed.
Low Minimum Investment: Investors can start with a minimum investment of Rs. 1,000, with additional investments in multiples of Rs. 1,000. There is no maximum investment limit under the scheme.
Floating Rate Savings Bonds, 2020 (Taxable), have a maturity period of seven years from the date of subscription. These bonds may be considered by investors who can keep their funds invested for the long term. Investors should assess their liquidity requirements and future financial needs before investing.
Premature encashment is available only to eligible senior citizen investors, subject to the prescribed conditions. The lock-in period is six years for eligible investors aged 60 to below 70 years, five years for those aged 70 to below 80 years, and four years for those aged 80 years and above. A penalty equal to 50% of the interest due for the last six months is deducted in the event of premature encashment. Therefore, these bonds may not be suitable for investors who require easy access to their funds before maturity.
The interest earned on Floating Rate Savings Bonds, 2020 (Taxable), is taxable under the applicable income tax laws. The tax liability depends on the investor's applicable tax slab and individual tax circumstances. Investors should consider the tax impact of the interest income before making an investment decision.
Eligible investors include individuals who are residents of India, either individually or jointly, and parents or legal guardians investing on behalf of a minor. Hindu Undivided Families (HUFs) are also eligible to invest, subject to the scheme's prescribed rules. Applications can be made through authorised receiving banks and other permitted channels where the subscription facility is available.
Floating Rate Savings Bonds, 2020 (Taxable), may be considered by investors seeking regular half-yearly interest income from a government-backed investment and who can commit their funds for the long term. However, the suitability of these bonds depends on an investor's financial goals, liquidity requirements, tax position and overall investment portfolio.
The interest rate may change every six months, and the investment generally cannot be freely withdrawn before maturity. Investors should review the latest scheme terms, eligibility conditions and applicable interest rate before investing.
Disclaimer: Interest rates and scheme details are subject to change in accordance with applicable government notifications. Please verify the latest information with the Reserve Bank of India or an authorised receiving bank before investing. Tax treatment depends on the investor's individual circumstances and applicable tax laws.