आरबीआई फ्लोटिंग सेविंग बॉन्ड – गणना प्रक्रिया के साथ-साथ पूर्ण विवरण

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The Reserve Bank of India (RBI) has introduced floating saving bonds as an attractive investment avenue for individuals looking for a safe and stable earning instrument. Designed to provide investors with a convenient way to grow their savings, these bonds have gained popularity among individuals seeking stable long-term investment instruments.

In this blog, we will look into the details of the RBI floating saving bond, and explore their features, benefits, and the calculations involved to help you make an informed investment decision.

What is RBI floating Saving Bond?

RBI floating Saving Bond is a government-backed investment instrument offered by the Reserve Bank of India. It is designed to provide investors with flexibility in choosing both fixed and floating interest rates for growing their funds. It allows them to benefit from potential interest rate movements if they want. 

The interest rate on National Savings Certificates (NSC) has a link with the interest rate on RBI floating saving bonds. Any modification to NSC interest rate influences the interest rate on the variable-rate bonds issued by RBI. 

Key Features of RBI Floating Saving Bond

Here are some top features of floating-saving bonds by the Reserve Bank of India: 

• Option to Invest a Large Amount: The minimum investment amount is ₹ 1,000, and there is no maximum limit. So, the bond is accessible to individuals across different income groups.
• Semi-Annual Interest Payment: Semi-annual interest on the bonds is due on January 1 and July 1 of each year. The interest rate will be changed every six months, with the first reset taking place in January. The option to pay interest on a cumulative basis is not available.
• Income Tax on Interest: Depending on the bond holder’s net taxable income, interest on the bonds will be subject to income tax under the Income-tax Act of 1961.
• No Wealth Tax Obligation: Bonds will not be subject to wealth tax under the 1957 Wealth Tax Act.
• Non-Tradability: The Bonds are not tradable on the secondary market and cannot be used as security for loans from banks, non-banking financial institutions, or other financial institutions.
• Nomination Facility: In accordance with the terms of the Government Securities Act, 2006 (38 of 2006), and Government Securities Regulation, 2007, the holders can denote one or more individuals as nominees. 

Calculation of Returns

To understand returns from RBI floating saving bond, let’s consider an example. Suppose you invest ₹50,000 in these bonds for a tenure of 7 years with an interest rate of 8%, compounded semi-annually. Now, check out the following table to understand how much return you would earn:

*Note: Please keep in mind that the calculation assumes an interest rate of 8% for a better understanding of this calculation. It is essential to verify the current interest rate offered by RBI before making any investment decisions.

FAQs on RBI floating Saving Bond

1. How does the interest rate on RBI floating saving bond change from time to time? 

The interest rate on RBI floating saving bond is reset every six months considering the changes in the current National Savings Certificate (NSC) rate with a spread of (+) 35 basis points. 

2. What is the lock-in period for RBI floating savings bonds? 

The maturity period for the bonds is set at seven years. Individual investors who are 60 years of age or older are permitted to make premature withdrawals, subject to a minimum lock-in time based on the age of the respective bondholder.

3. What is the minimum lock-in period of RBI floating savings bonds for senior citizens?

Senior citizens get the option for premature withdrawal from the RBI Floating savings bonds with a penalty after a minimum lock-in period. The lock-in period is six years for senior citizens in the age group of 60 to 70 years, and five years for those aged between 70 to 80 years.  

4. Is it safe to invest in RBI bonds? 

The Reserve Bank of India issues RBI floating savings bonds on behalf of the Government of India. So, you can stay assured that your investment in these bonds is completely safe. 

5. Are Floating Rate Savings Bonds subject to a Collateral Facility?

The Bonds cannot be used as collateral for availing loans from banks, financial institutions, or non-banking organizations.