What Are RBI Floating Rate Savings Bonds? Benefits, Risks, and Best Plans in India

kumarmaruti — Thu, 10 Jul 2025 10:45:55 +0000

What is RBI Bonds (Floating Rate Savings Bonds)?

RBI Bonds (Floating Rate Savings Bonds) are government securities issued by the Reserve Bank of India (RBI) on behalf of the Government of India. These bonds offer a floating interest rate which is reset periodically based on a benchmark (typically linked to the government securities yield). They are designed to provide investors with protection against interest rate fluctuations.

Issuer: Reserve Bank of India (RBI)
Interest: Floating rate (reset every 6 months)
Tenure: Typically 7 years
Purpose: Safe investment backed by the Government of India with returns linked to market interest rates.

Benefits of RBI Bonds (Floating Rate Savings Bonds)

Benefit	Explanation
Safety	Backed by Government of India, almost risk-free in terms of default
Floating Interest Rate	Interest rate resets every 6 months, protecting investors against rising interest rates
Tax Benefits	Interest is taxable, but no TDS is deducted
Liquidity	Tradable on stock exchanges (with some conditions)
Non-Callable	Cannot be redeemed before maturity, ensuring fixed tenure
No Market Risk on Principal	Principal is guaranteed, no risk of capital loss if held to maturity

Risks of RBI Bonds (Floating Rate Savings Bonds)

Risk	Explanation
Interest Rate Risk	Though floating rate mitigates this, if benchmark falls, returns decline
Taxation on Interest	Interest income is taxable as per your income tax slab
Liquidity Risk	Though tradable, secondary market may have low liquidity
No Early Redemption	Investors can’t redeem before maturity, reducing flexibility
Inflation Risk	If inflation exceeds bond yield, real returns could be negative

Top RBI Floating Rate Saving Bonds Plans in India

Note: RBI issues these bonds in different tranches/series, usually differing slightly in interest rates and issuance dates. Here are some recent/major ones.

Plan Name	Issue Date	Tenure	Interest Rate (Floating)	Special Features
RBI Floating Rate Savings Bonds 2020 Series A	Aug 2020	7 years	7.15% p.a. (reset every 6 months)	Tradable on exchanges
RBI Floating Rate Savings Bonds 2019 Series A	Sep 2019	7 years	7.25% p.a. (reset every 6 months)	Tax benefits, no TDS
RBI Floating Rate Savings Bonds 2018 Series A	Nov 2018	7 years	7.10% p.a. (reset every 6 months)	Government-backed safety
RBI Floating Rate Savings Bonds 2017 Series A	Oct 2017	7 years	7.20% p.a. (reset every 6 months)	Floating rate linked to G-sec yield
RBI Floating Rate Savings Bonds 2016 Series A	July 2016	7 years	7.30% p.a. (reset every 6 months)	No TDS deducted
RBI Floating Rate Savings Bonds 2015 Series A	Aug 2015	7 years	7.35% p.a. (reset every 6 months)	Tradable on NSE/BSE
RBI Floating Rate Savings Bonds 2014 Series A	Sep 2014	7 years	7.25% p.a. (reset every 6 months)	Safe government-backed
RBI Floating Rate Savings Bonds 2013 Series A	Oct 2013	7 years	7.40% p.a. (reset every 6 months)	Semi-annual interest payment
RBI Floating Rate Savings Bonds 2012 Series A	Nov 2012	7 years	7.50% p.a. (reset every 6 months)	Principal protection
RBI Floating Rate Savings Bonds 2011 Series A	Dec 2011	7 years	7.60% p.a. (reset every 6 months)	Government guarantee

Comparison Table: RBI Floating Rate Saving Bonds Plans

Plan Name	Issue Date	Interest Rate (Initial)	Tradability	Tax on Interest	Liquidity	Pros	Cons
2020 Series A	Aug 2020	7.15%	Yes (Stock Exchange)	Taxable (No TDS)	Moderate (Tradable)	Govt backed, floating rate, tradable	No early redemption
2019 Series A	Sep 2019	7.25%	Yes	Taxable (No TDS)	Moderate	Slightly higher initial rate	Locked for 7 years
2018 Series A	Nov 2018	7.10%	Yes	Taxable (No TDS)	Moderate	Safe, floating rate	Interest taxable
2017 Series A	Oct 2017	7.20%	Yes	Taxable	Moderate	Government backed, floating interest	Illiquid if sold prematurely
2016 Series A	July 2016	7.30%	Yes	Taxable	Moderate	No TDS, floating interest	No early redemption
2015 Series A	Aug 2015	7.35%	Yes	Taxable	Moderate	Tradable, govt guarantee	Long lock-in period
2014 Series A	Sep 2014	7.25%	Yes	Taxable	Moderate	Govt backed, floating rate	Interest taxed
2013 Series A	Oct 2013	7.40%	Yes	Taxable	Moderate	Semi-annual interest payments	Market rate dependent
2012 Series A	Nov 2012	7.50%	Yes	Taxable	Moderate	Principal protection, floating rate	No early withdrawal
2011 Series A	Dec 2011	7.60%	Yes	Taxable	Moderate	Govt guaranteed, semi-annual interest	Interest income taxed

Frequently Asked Questions (FAQs) on RBI Floating Rate Savings Bonds

Who can invest in RBI Floating Rate Savings Bonds?
Resident Indian individuals including minors and HUFs.
What is the tenure of these bonds?
Typically 7 years.
How is the interest rate determined?
The interest rate is floating and reset every 6 months based on the prevailing government security yields.
Is the principal amount guaranteed?
Yes, principal is guaranteed by the Government of India.
Are these bonds tradable?
Yes, they are listed and can be traded on NSE/BSE.
Is there a lock-in period?
Yes, bonds cannot be redeemed before maturity (7 years).
Are the interest payments taxable?
Yes, interest income is taxable as per the investor’s income tax slab.
Is TDS deducted on interest?
No, no tax deduction at source is applicable.
Can NRIs invest in these bonds?
No, these bonds are generally meant for resident Indians only.
How to apply for these bonds?
Through designated banks, post offices, or online platforms during the bond issuance period.