The Reserve Bank of India on Monday announced 7.88 per cent interest rates on Floating Rate Bond 2028. The interest rate was hiked by 53 bps per annum and will be applicable till October 3, 2023.
RBI in a press release said that the FRB carries a coupon whose base rate is equivalent to the average of the Weighted Average Yield (WAY) of the last three auctions of 182 Day T-Bills and a fixed spread of 0.64 per cent.
What is a Floating Rate Savings Bond?
FRSB is a fixed-income option issued by the government. The interest rate is 18 basis points higher than the interest rate offered on National Savings Certificates of NSC. Additionally there is no upper cap or maximum limit on investment, but these bonds have other terms and conditions. One of the terms is a lock-in period of seven years and the interest rate is generally announced every six months.
The interest earned on these bonds are taxable at normal slab rates applicable to an individual.
Who can invest in Floating Rate Savings Bonds?
Individuals can invest in the single and holding mode. Additionally the Hindu Undivided Families (HUFs) are also eligible to invest in Floating Rate Savings Bonds. Only Indian citizens can invest in these bonds.
