This rate is calculated by adding a fixed spread of 0.35% to the National Savings Certificate (NSC) rate, which stands at 7.70% for the July-September 2025 quarter. The next interest payment under this rate will be made on January 1, 2026.

"The coupon rate on FRSB 2020 (T) for the period July 1, 2025 to December 31, 2025 and payable on January 1, 2026 remains at 8.05% (7.70% + 0.35%), unchanged from the previous half-year," said RBI in an official statement released on July 1, 2025.

What is the RBI Floating Rate Savings Bond?

The RBI Floating Rate Savings Bond is a savings product issued by the Reserve Bank of India (RBI). It is designed for individual investors who want a safe and steady return from their investment. These bonds are backed by the Government of India, which means they come with a sovereign guarantee, making them very secure.

Unlike fixed-rate investments, the interest rate on this bond is not fixed. It changes every six months, depending on the NSC rate. To this NSC rate, the RBI adds an extra 0.35%.

 

Who Can Invest in These Bonds?

 

Indian residents, including individuals and Hindu Undivided Families (HUFs), are allowed to invest in RBI Floating Rate Savings Bonds. You can invest either in your own name or jointly with someone else.

However, Non-Resident Indians (NRIs) are not allowed to invest in these bonds. Senior citizens can also invest and have the added benefit of early withdrawal options, which are explained later.

Key Features of RBI Floating Rate Savings Bonds

Investment: You can start investing in RBI Floating Rate Savings Bonds with a minimum amount of Rs 1,000. There is no maximum limit, so you can invest as much as you like. The investment must be made in multiples of Rs 1,000.

Tenure: The RBI Floating Rate Savings Bonds have a lock-in period of 7 years. This means your money will stay invested for the full 7 years. If you're a regular investor, you cannot withdraw your money before this period ends.

Premature Withdrawal for Senior Citizens: Senior citizens are allowed to withdraw their money before the 7-year period, but certain conditions apply. If the investor is between 60 and 70 years old, the lock-in period is 6 years.

For those aged 70 to 80, it's 5 years, and for those above 80, the lock-in is only 4 years. However, if they choose to withdraw early, 50% of the interest earned in the last 6 months will be deducted as a penalty.

Interest Payment: Interest on RBI Floating Rate Savings Bonds is paid twice a year, once on January 1 and again on July 1. The interest is not compounded, which means you receive the interest as a payout each time instead of it being added to the bond. You also cannot reinvest the interest back into the bond.

Mode of Holding: RBI Floating Rate Savings Bonds can be held in physical or electronic (demat) form through a Bond Ledger Account (BLA). These bonds can't be traded or sold but can be used as loan collateral.

Tax Rules: The interest you earn from these bonds is fully taxable according to your income tax slab. There are no tax benefits under Section 80C for this investment. Also, if your total interest in a year goes over Rs 10,000, tax will be deducted at source (TDS).