Key Takeaway
RBI Floating Rate Bonds pay interest at NSC rate + 0.35% (currently ~8.05%), reset every 6 months. The 7-year tenure has no premature withdrawal (except for 60+ age group after 4 years).
💡 **Floating Rate Mechanism**: Coupon rates are pegged to the National Savings Certificate (NSC) rate plus a premium of **0.35%** p.a. Interest rates reset on January 1st and July 1st.
Payout Schedule & Rules:
- Sovereign guarantee: Issued by the RBI. Absolutely default-free.
- Interest payments: Paid semi-annually on **January 1st** and **July 1st**.
- Taxability: Interest is fully taxable under your tax slab; TDS applies if interest exceeds ₹10,000 p.a.
- Senior Citizen Exit: Premature redemption is allowed for holders aged 60+ after a minimum 4 to 6 year lock-in.
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Frequently Asked Questions
What is the interest rate on RBI Floating Rate Bonds?
The rate is floating and resets semi-annually. It is contractually linked to NSC rates, offering NSC rate + 0.35% premium.
Can senior citizens withdraw early from RBI Floating Bonds?
Yes. While the general lock-in is 7 years, senior citizens aged 60-70 can withdraw after 6 years, ages 70-80 after 5 years, and age 80+ after 4 years.
Is interest paid monthly or cumulative?
Interest is paid non-cumulatively every 6 months (on January 1st and July 1st). There is no compounding or cumulative option.
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