RBI Floating Rate Savings Bonds, 2020 (Taxable), often just called “RBI bonds”, are 7-year government-backed bonds that pay a floating interest rate. For January 1 to June 30, 2026 the rate is 8.05% per year, payable on July 1, 2026. The rate resets every six months, so it can go up or down.
Short on time? The rate is not fixed. It is the National Savings Certificate (NSC) rate plus a 0.35% spread, reset on every January 1 and July 1. So today's 8.05% may change at the next reset.
These are savings bonds issued by the Reserve Bank of India for resident individuals and Hindu Undivided Families (HUFs). You lend money to the government for 7 years and earn interest twice a year. Your capital is backed by the Government of India, so the credit risk is very low. The catch is that the interest rate can change every six months.
A fixed-deposit rate is locked the day you invest. A floating rate is not. RBI links the FRSB coupon to the NSC rate, a small-savings rate that the government revises each quarter. RBI then adds a fixed 0.35% (35 basis points) on top.
So when small-savings rates rise, your FRSB payout rises at the next reset. When they fall, your payout falls. This protects you from being stuck with a low rate for 7 years, but it also means you cannot count on today's rate lasting.
Here is the current position, confirmed by RBI and major banks:
Treat 8.05% as the rate for this window only, not a permanent return. Check the rate again at each reset.
Nomination is allowed for a sole individual holder, so the bond can pass to your nominee or legal heir if you die.
The interest is fully taxable. There is no tax break here, and no Section 80C deduction. Plan your investment with the tax in mind.
Because the interest is paid out and not reinvested, you receive a regular taxable income stream rather than a lump sum at maturity.
As a rule, no. The money is locked for the full 7 years, and the bonds are not transferable and cannot be sold in the secondary market. The only exit is on maturity, by nomination, or to a legal heir on death.
There is one exception. Senior citizens can withdraw early after a minimum lock-in that depends on their age:
A penalty applies on premature withdrawal. Banks deduct 50% of the interest due for the last six months. You must give valid age proof to the issuing bank.
Suppose a retiree invests Rs 5,00,000 in FRSB at the current 8.05% rate. The yearly interest works out to about Rs 40,250, paid in two parts of roughly Rs 20,125 on January 1 and July 1. That interest is added to the retiree's income and taxed at their slab. At the next reset, the rate could rise above or fall below 8.05%, changing the payout. This is an illustration only, not a quote or an offer.
FRSB bonds suit savers who want a safe, government-backed home for money they will not need for 7 years, and who want a regular half-yearly income. They fit conservative investors and retirees who value capital safety over the chance of higher returns.
They suit you less if you need to withdraw early, if you want compounding rather than a payout, or if you are in a high tax bracket and want tax-efficient growth instead of fully taxable interest. NRIs cannot invest at all.
For January 1 to June 30, 2026, the rate is 8.05% per year, payable on July 1, 2026. It is the NSC rate of 7.70% plus a 0.35% spread. The rate resets every six months, so check it again at the next reset on July 1, 2026.
No. The interest is fully taxable under the Income-tax Act, 1961, at your income-tax slab rate, and TDS is deducted when interest is paid. There is no Section 80C deduction, and the position is the same under the old and the new tax regime.
No. Only resident individuals, including joint resident holders, and Hindu Undivided Families can invest. Non-Resident Indians are not eligible to buy these bonds.
No. The minimum is Rs 1,000 and you invest in multiples of Rs 1,000, but there is no upper limit on how much you can put in.
Only senior citizens can. The minimum lock-in is 6 years for ages 60 to 70, 5 years for ages 70 to 80, and 4 years for ages 80 and above. A penalty of 50% of the last six months' interest applies. Other investors must hold to maturity.
No. There is no cumulative option. Interest is paid out every six months on January 1 and July 1, so you receive a regular income rather than a compounded lump sum at maturity.