RBI Floating Rate Savings Bond: 8.05% Rate and Features
Why in the news
With FD rates easing after RBI’s rate cuts, investors in 2025 looked at the government-backed Floating Rate Savings Bond as a safer higher-yield choice.
Key facts
- Issued by RBI on behalf of the Government of India; launched 1 July 2020, replacing the 7.75% Savings (Taxable) Bonds, 2018.
- Rate = prevailing NSC rate + 0.35%, reset every 6 months (1 January and 1 July).
- Rate as of 1 July 2025: 8.05% (7.70% + 0.35%).
- 7-year maturity; no premature exit for general investors.
- Minimum ₹1,000 in multiples of ₹1,000; no maximum.
- Held in demat or bond ledger account; interest is paid semi-annually into the bank account.
- Interest is taxable as ‘Income from Other Sources’ as per slab, with no TDS.
- Fully government-backed, so no default risk.
Senior citizen lock-in
| Age band | Lock-in |
|---|---|
| 60-70 | 6 years |
| 70-80 | 5 years |
| Above 80 | 4 years |
Significance
- A safe alternative to fixed deposits, especially for senior citizens.
- Floats with the NSC rate, so it guards against falling interest rates.
- Gives stable long-term regular income.
Exam angle
- Spread over NSC: 0.35%.
- Reset dates: 1 January and 1 July.
- Tenure: 7 years; minimum: ₹1,000.