What are RBI floating rate savings bonds?
Interest rate on RBI floating rate savings bonds
Interest on RBI floating rate bonds
RBI floating rate bonds lock-in and maturity periods
Improved nomination and investor service processes
RBI floating rate bond premature redemption
The Reserve Bank of India (RBI) has issued revised operational guidelines for Floating Rate Savings Bonds, 2020 (Taxable), aiming at improving investor services and streamlining processes. The updated rules, released on April 2, 2026, replace the earlier guidelines issued in 2020 and will take effect immediately.Floating Rate Savings Bonds, 2020 (Taxable), are government-backed investment instruments designed primarily for retail investors seeking stable and relatively low-risk return.RBI floating rate savings bonds offer a high interest rate of 8.05%, making them a low-risk, government-backed alternative to bank fixed deposits.The revised guidelines also cover key aspects such as bond issuance, nomination facilities, interest payments, premature redemption and investor services. Notably, receiving offices such as banks will be required to introduce enhanced digital facilities, including online application submission and account management features, within specified timelines.As per the new guidelines, Periodic interest payments on RBI floating rate bonds will be made on July 1, January 1, respectively. Interest will be paid every six months and the maturity amount will be directly credited to the bank account of the bond holder. The rates will be linked to the NSC (National Savings Certificate) rate + 0.35%.The maturity period of these bonds will be seven years. The bonds will be repayable on the expiry of seven years from the date of the issuance of the bond. No interest will be accrued after the maturity of the bond.The revised rules provide clearer instructions regarding nomination facilities, including adding or changing nominees. This is expected to make the process smoother for investors and their family members.The RBI has clarified processes related to the premature redemption of bonds , ensuring better transparency and easier handling of such requests by receiving offices.Interest earned on RBI 2020 bond is fully taxable. Tax deduction at Source (TDS) will be deducted unless exemption applies.Investors may soon get an online facility to check their BLA holdings, update nominee details, request premature redemption, and download documents such as the Certificate of Holding (CoH), interest statements, redemption payment statements and TDS certificates. The responsible offices (ROs) must ensure these services are made available to investors by December 31, 2026, says the RBI guidelines.