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Invest in RBI Floating Rate Savings Bonds

3/15/20241 min read

Investment in RBI Floating rate Bonds
Investment in RBI Floating rate Bonds

Investing in RBI Floating Rate Savings Bonds is a prudent choice for individuals seeking a secure and flexible investment avenue.

  • These bonds provide a secure and risk-free investment option as they are issued by the Reserve Bank of India. This ensures the safety of your principal amount.

  • The interest rates offered by these bonds are subject to periodic revisions, which means that you can enjoy higher returns as interest rates increase over time. The RBI floating rate savings bond pays 0.35% + NSC Interest rate (current rate 8.05%), which is reset after every 6 months.

  • These bonds offer flexibility as they have a tenure of 7 years. This allows you to align your investment goals and financial needs accordingly. Moreover, it allows a lower lock in for senior citizens (depending upon age, it can go as low as 4 years).

  • The interest earned on these bonds is taxable, but there is no TDS (Tax Deducted at Source) levied on it. This makes it attractive for individuals in higher tax brackets.

  • It starts with a minimum investment of INR 1000, in multiples of INR 1000 thereof, and there is no limit to maximum investment.

  • Interest is paid semi annually on 1st of Jan and 1st of July every year.

  • It is open to investment by individuals and HUF. NRIs are not eligible to invest in RBI floating rate savings bond.

  • Applications for the bonds are received in the designated branches of SBI, Nationalised banks, ICICI Bank Ltd., HDFC Bank Ltd., AXIS Bank Ltd., and IDBI Bank Ltd. or online at RBI retail direct.

This blog post is only for educational purposes. Please do your own research or consult from a SEBI registered investment advisor before making any financial decision. Past return does not guarantee future returns.