Imagine you have ₹10,000 and want to keep it safe while earning interest from the Government of India.

Instead of keeping the money in a savings account, you lend it to the Government of India. In return, the government promises to pay you interest.

That’s exactly what RBI Floating Rate Savings Bonds (FRSB) 2020 (Taxable) do.

1. What is this bond?

• It is a savings investment scheme issued by the Government of India.
• RBI manages the bonds on behalf of the government.
• You invest your money for a fixed period.
• The government pays you interest every six months.
• Your original investment is returned when the bond matures.

Think of it as lending money to the government and receiving rent (interest) for lending it.

2. How much interest does it pay?

Current rate: 8.05% per year

As of November 12, 2026, the interest rate is 8.05% per annum, applicable from July 1 to December 31, 2026.

The interesting part is that the rate can change every six months.

It is calculated using:

NSC interest rate + 0.35%

For example:

• NSC rate = 7.70%
• Extra interest = 0.35%
• Bond interest = 8.05%

This is why it is called a floating rate bond. The interest rate moves when the linked rate changes.

3. Example: What if you invest ₹1 lakh?

Let’s assume the interest rate stays at 8.05% for the whole year.

Your investment

₹1,00,000

Annual interest

₹8,050

Interest every six months

₹4,025

Original investment returned after maturity

₹1,00,000

Total interest over 7 years: ₹56,350/- Illustration assumes the interest rate never changes and ignores tax. Actual interest may differ.

You receive the interest twice a year:

• January 1
• July 1

You cannot choose to reinvest the interest automatically. There is no cumulative option.

4. Important rules you should know

5. What does TAXABLE mean?

This is very important!

Suppose you earn ₹8,050 interest in one year.

That ₹8,050 is added to your taxable income and taxed according to your applicable income-tax rules.

For example, if your applicable marginal tax rate is 20%, the approximate tax on ₹8,050 would be ₹1,610, before considering cess and other applicable rules.

So your interest after this illustrative tax would be ₹6,440.

6. Can you withdraw your money before 7 years?

Generally, no. You must hold the bond for 7 years.

However, senior citizens get special early-withdrawal facilities:

Premature withdrawal is subject to applicable conditions and penalties.

7. Who can invest?

• Indian residents.
• Individuals, including joint investors.
• Parents or legal guardians on behalf of minors.
• Hindu Undivided Families (HUFs).

NRIs cannot invest in these bonds.

8. How can you buy these bonds?

You can apply through authorised receiving offices, including:

• State Bank of India (SBI).
• Designated branches of nationalised banks.
• HDFC Bank.
• ICICI Bank.
• Axis Bank.
• IDBI Bank.

Your investment is recorded electronically in a Bond Ledger Account (BLA). You don’t need a Demat account.

9. Advantages and disadvantages

Advantages

• Government-backed investment.
• Regular income every six months.
• No maximum investment limit.
• Interest rate may increase when NSC rates increase.
• No stock-market fluctuations in the bond’s value.
  
  Disadvantages
  
• Your money is locked in for 7 years in most cases.
• Interest is taxable.
• Interest rate can decrease.
• Cannot sell the bond in the stock market.
• No automatic compounding or cumulative option.

10. Is this a good investment?

It depends on what you want.

My simple conclusion: RBI Floating Rate Savings Bonds are worth considering if you have surplus money, want government-backed security and need regular interest income.

But remember: an 8.05% interest rate is not the same as an 8.05% return after tax.

11. Let’s understand it with your investment amount

I can calculate exactly how much interest you would receive and how much would remain after tax.

FRSB interest calculatorHow much do you want to invest? (₹)

100000 Your approximate income-tax slab 0% 5% 20% 30%

Annual interest before tax

₹8,050

Approx. annual interest after tax

₹6,440

Six-monthly interest before tax

₹4,025

Assumes an unchanged 8.05% rate throughout the year. Tax calculation excludes cess and other adjustments.

You can also read the official details here: RBI official scheme notification  and Latest RBI interest-rate announcement .

The Floating Rate Savings Bonds, 2020 (Taxable), hereinafter referred to as “the bonds”, are issued by Government of India through the Receiving Offices authorized by Reserve Bank of India (RBI).

The list of the Receiving Offices authorised to issue the bonds is given in Appendix I. The eligibility criteria and other terms and conditions are specified in the (hereinafter referred to as “the notification”), as amended from time to time.

RBI FRSB 2020 (T) – Information Table

RBI Floating Rate Savings Bonds 2020 (Taxable)

Issued by Government of India through authorised receiving offices

Interest Rate History

Source: RBI interest-rate announcements. Reserve Bank of India+1

Premature Withdrawal Rules

Premature redemption is subject to applicable conditions. A penalty equal to 50% of the interest payable for the last six months is deducted. Personal Banking+1

Where to Invest?

You can apply through authorised receiving offices, including:

• State Bank of India (SBI)
• HDFC Bank
• ICICI Bank
• Axis Bank
• IDBI Bank
• Other authorised banks and institutions.

Important: The 8.05% rate is applicable until 31 December 2026. It is not a fixed rate for the entire seven-year investment period.

Note: This is a government savings bond, not a market-traded bond or an RBI-issued corporate investment product.

Sources

Official reference: RBI Operational Guidelines 2026.

• FRSB 2020 (T) – Operational Guidelines
• SBI
• Press Releases Jun 26, 2020
• Press Releases Jan 01 2026
• Press Release July 01, 2026
• Notification June 26, 2026
• Ministry of Finance Press Release
• Receiving Offices – Appendix I
• Government of India Notification No.F.No.4(10)-B(W&M)/2020 dated June 26, 2020
• stockholding.com