The Reserve Bank of India has announced that the FRSB 2020(T) interest rate will remain at 8.05% for the period July 1, 2026, to December 31, 2026. This rate stays unchanged from the previous half-year. Investors holding these bonds will receive their interest payment on January 1, 2027.
Key Details of the FRSB 2020(T) Interest Rate
The Floating Rate Savings Bond, 2020 (Taxable) links its coupon rate to the National Savings Certificate (NSC) rate. Additionally, the RBI applies a fixed spread of 35 basis points (bps) over the prevailing NSC rate. Therefore, with the NSC rate at 7.70%, the effective rate for bondholders stands at 8.05% (7.70% + 0.35%).
The government resets this rate every six months, starting from January 1, 2021. As a result, the next reset will apply from January 1, 2027. Meanwhile, investors can count on a stable return through the end of this calendar year.
What This Means for FRSB 2020(T) Investors
For retail investors, this announcement offers clarity and stability. However, the floating nature of these bonds means future rates could change if the NSC rate shifts. For example, any revision in small savings rates by the government would directly impact the next reset.
These bonds are taxable instruments issued by the Government of India. Therefore, investors must factor in their applicable income tax slab when calculating net returns. Despite taxation, 8.05% remains a competitive rate compared to many fixed deposits currently available in the market.
About Floating Rate Savings Bonds
The Government of India introduced FRSB 2020(T) through a notification dated June 26, 2020. These bonds target individual investors seeking a government-backed, low-risk savings option. Additionally, the half-yearly reset mechanism ensures the rate stays aligned with broader small savings trends.
Eligible investors can subscribe to these bonds through authorised banks and the RBI’s Retail Direct platform. As a result, they offer a convenient and secure avenue for long-term savings in India’s fixed-income space.
Source: RBI Press Releases
