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RBI Floating Rate Savings Bonds (FRSB) have emerged as a preferred option for investors looking for safe and guaranteed returns amid stock market fluctuations and periodic changes in fixed deposit (FD) rates by banks. Issued by the Reserve Bank of India (RBI) on behalf of the Government of India, these bonds come with 100% sovereign guarantee, which means there is zero risk of capital loss. What are RBI Floating Rate Savings Bonds (FRSB)? RBI Floating Rate Savings Bonds is a Government Debt Instrument backed by the Government of India. 'Floating rate' means that the interest rate available on it does not remain constant or fixed during the entire period, but keeps changing from time to time. Its interest rate is directly linked to the prevailing interest rate of National Savings Certificate (NSC). As a rule, the interest on FRSB is always fixed at 0.35% (35 basis points) above the prevailing NSC rate. Its interest rates are reviewed by the government every 6 months (on January 1 and July 1) and interest is credited to the bank accounts of investors on a half-yearly basis. Key Features and Terms: Tenure, Investment Limit and Lock-in Minimum and Maximum Investment: Investment can be started from a minimum of Rs 1,000 (face value). There is no upper limit on maximum investment. Maturity Period: The lock-in period of these bonds is 7 years. Interest Payment Cycle: Interest is paid only half yearly (on January 1 and July 1 every year). Cumulative option is not available in this. Eligibility: Any single citizen of India, joint account holder or guardian on behalf of a minor can buy it. Hindu Undivided Families (HUF) are also eligible, but Non-Resident Indians (NRIs) cannot invest in it. Premature Withdrawal: Withdrawal is not allowed before 7 years for general investors below 60 years of age. However, relaxation is given to senior citizens based on age group—withdrawals are allowed after 6 years for investors aged 60 to 70 years, after 5 years for 70 to 80 years and after 4 years for those above 80 years of age. Tradability and Transfer: These bonds are not tradable in the stock market nor can they be transferred to any other person (except in case of succession to the nominee). Tax Rules: TDS and Income Tax Liability Interest received from RBI Floating Rate Savings Bonds is fully taxable. The interest amount received is added to the total annual income of the investor and tax is deducted as per their respective income tax slab. Under Section 194A of the Income Tax Act, if the total interest earned in a financial year exceeds the prescribed limit (Rs 50,000 for senior citizens and Rs 10,000 for others), banks deduct Tax Deducted at Source (TDS) at the time of payment. Investors falling within the tax exemption limit can submit Form 15G or Form 15H. Complete process of purchasing RBI Floating Rate Bonds (Online & Offline) Investors can buy these bonds through digital medium from home or offline by visiting the bank branch: 1. Online process through RBI Retail Direct Portal: Visit the official portal of Reserve Bank of India rbiretaildirect.org.in. To open your 'Retail Direct Gilt (RDG) Account' complete PAN Card, Aadhaar, Savings Bank Account and Digital KYC process. After account activation, go to 'Primary Market' section and select 'Floating Rate Savings Bonds (FRSB)'. Enter the amount to be invested and complete the payment through net banking or UPI. The bonds will be released electronically into your BLA (Bond Ledger Account). 2. Online/Offline Process through Authorized Banks: Most of the major public and private banks including State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda, ICICI Bank, HDFC Bank and Axis Bank are authorized to issue FRSB. If you have net banking facility of these banks, then go to 'Investments' or 'Govt Schemes' tab and select 'RBI Floating Rate Bonds' option and apply online by filling the form. For offline application, visit the authorized bank branch, fill the FRSB Application Form (Form A), attach identity proof (PAN/Aadhaar), cheque, and canceled check and submit it. On completion of the process, a 'Certificate of Holding' is issued by the bank. Who should invest in it? This scheme is best suited for investors who want to protect their capital without any market risk and who do not have an immediate need for the money for up to 7 years. It is a reliable option especially for senior citizens looking for additional income like regular half yearly pension and investors looking for government guaranteed investment for long term.