Beginner guide · 4-minute read
RBI Floating Rate Bond, explained simply
The RBI Floating Rate Savings Bond is a 7-year bond from the Government of India. You lend it money, it pays you interest every 6 months, and you get your money back after 7 years. Its rate isn't fixed: it follows the NSC rate.
Checked on 15 Oct 2026 against RBI's rate notice for Jul–Dec 2026 and the bond's 2020 notification.
In one minute
- Who runs it
- The Government of India, through RBI. Sold by SBI, nationalised banks and a few private banks.
- What it pays
- 8.05% a year for Jul–Dec 2026: the NSC rate plus 0.35%, reset every 6 months.
- How long
- 7 years. People aged 60 or more can exit after 4 to 6 years.
- How much
- From ₹1,000, with no upper limit.
How it works, with real numbers
Put in ₹1,00,000 and you'd get ₹4,025 every 6 months, ₹8,050 a year. It's taxed at your slab rate; at 30% plus cess you'd keep about ₹2,769 each time. Your ₹1,00,000 comes back after 7 years.
If the NSC rate goes up or down, your bond's rate follows at the next reset, on 1 January or 1 July. That's true for bonds you already hold, not just new ones.
Try the RBI bond calculatorHow the RBI Floating Rate Bond rate has changed
RBI Floating Rate Bond pays 8.05% today, unchanged since July 2023. Since it began in July 2020, it has ranged from 7.15% (2020–2022) to 8.05% (2023–2026).
- The rate is reset every 6 months to the NSC rate plus 0.35%, for bonds you already hold too. So over the years you earn whatever the line shows, not just today's 8.05%.
See every rate change (3)
| Period | Rate a year |
|---|---|
| Jul 2023 – now | 8.05% |
| Jan 2023 – Jun 2023 | 7.35% |
| Jul 2020 – Dec 2022 | 7.15% |
Source: RBI, set at the NSC rate plus 0.35%.
Pros and cons
Good things
- Government-backed. As safe as it gets in India.
- The rate follows NSC. If small-savings rates rise, so does yours.
- Regular income. Paid into your bank account every 6 months.
- No upper limit. Unlike SCSS or MIS, you can put in any amount.
Things to watch
- Locked for 7 years. Only people aged 60 or more can exit early, after 4 to 6 years, giving up half of the last 6 months' interest.
- Interest is taxable. At your slab rate, with TDS deducted.
- The rate can fall too. If NSC's rate drops, so does yours.
- No compounding. Interest is paid out, not added to the bond, so it doesn't earn interest on interest.
- Can't be sold. It isn't traded, so you can't sell it to someone else.
Is it right for you?
Mistakes to avoid
- Forgetting the tax. The interest is taxed every year at your slab rate. If your slab is higher than the TDS the bank deducts, you pay the rest with your return.
How to start
- Go to SBI, a nationalised bank or one of the private banks that sell it; some let you apply online.
- Fill in the application with your PAN and KYC details.
- Pay the amount. You'll get a certificate of holding for your Bond Ledger Account.
- Add a nominee.
Words you'll see
- Floating rate
- A rate that changes over time, here every 6 months.
- Reset
- The date the rate is set again: 1 January and 1 July.
- Bond Ledger Account
- The electronic account your bond is held in. The bank gives you a certificate of holding as proof.
- TDS
- Tax deducted at source: tax the bank keeps back from each interest payment.
This guide explains how things work. It is not advice on what you should invest in. NetReturns is not SEBI-registered.