The Reserve Bank of India’s floating rate savings bonds, offering an 8.05% coupon, remain popular among income-focused investors, though strict purchase rules and evolving eligibility criteria shape their appeal.
The Reserve Bank of India’s Floating Rate Savings Bonds continue to attract attention from income-seeking savers because they offer sovereign backing and a coupon currently set at 8.05%. But the rules on who can buy them remain strict: fresh investment is limited to resident individuals and Hindu Undivided Families, while non-resident Indians cannot make new purchases, according to the RBI’s framework and reporting by Business Today.
For existing holders, the position is more nuanced. If someone buys the bonds while resident and later becomes an NRI, they may keep the bonds until maturity. However, Business Today said any repatriation of interest or redemption proceeds must comply with the Foreign Exchange Management Act, which governs the movement of funds across borders.
The rate itself is not fixed for the life of the bond. The RBI resets the coupon every six months, and the current 8.05% applies for the July 1 to December 31, 2026 period. The rate is tied to the National Savings Certificate rate plus 35 basis points, meaning the bond’s return moves with the government’s small-savings benchmark rather than staying static.
The instrument has a seven-year maturity, pays interest half-yearly on January 1 and July 1, and does not allow trading in the secondary market. Premature redemption is generally not available, although certain investors aged 60 and above may be eligible under RBI rules and lock-in conditions. The interest is taxable at the investor’s slab rate and tax deducted at source applies, so the headline yield should not be confused with the post-tax return. Minimum investment is ₹1,000, with further purchases in multiples of ₹1,000 and no upper limit, according to the materials reviewed by Paisabazaar, LiveMint and Business Standard.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
