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RBI Floating Rate Savings Bonds
The RBI Floating Rate Savings Bonds are a simple, low-risk investment option that is perfect for those looking for a hassle-free way to grow their money. With attractive RBI Floating Rate Bond interest rates and an extended maturity period, these bonds allow you to grow money over time. Plus, you can start investing with as little as ₹1,000 and increase the investment amount in multiples of ₹1,000. It must be noted that interest earned on these bonds is subject to taxation.
Features & Benefits
Hassle-free investment
Invest in an RBI Floating Rate Savings Bond by visiting the nearest Axis Bank branch or using Internet banking / Mobile Banking.
Floating interest rate
The interest rate is linked to prevailing market rates (specifically, the National Saving Certificate rate + 0.35%).This means returns can increase when interest rates in the economy rise.
Invest as much as you want
- Start with a minimum of ₹1,000 and invest more in increments of ₹1,000.
- No cap on the maximum amount.
Lock in your investment for a secure future
The bonds mature in 7 years from the date of issue.
Secure your legacy with the nomination facility
Sole holders can nominate their loved ones.
Your bond, your ownership
RBI Floating Rate Bonds cannot be transferred, giving you complete control and ownership.
Safe & Government-Backed
Issued by the Government of India, making it one of the safest investment options available — virtually zero default risk.
Regular Income
Pays interest every 6 months, making it a good option for those seeking stable periodic income, like retirees.
Flexible returns
Unlike other investment products with fixed returns, FRSB interest rates are revised every 6 months potentially more rewarding in a rising rate environment.
Capital Protection
Your principal is 100% secure, and there’s no market risk like other market linked investment products.
Eligibility criteria for RBI FRSB
You can invest in RBI FRSBs if you meet the following criteria:
However, a Non-Resident Indian (NRI) cannot invest in RBI FRSBs in India.
Documentation for RBI FRSB
To invest in RBI FRSBs you need to have the following documents:
Benefit from a high interest rate
Invest between wide limits
Advantages of investing in RBI Floating Rate Savings Bonds 2020
RBI Floating Rate Savings Bonds 2020 are fixed-income instruments issued by the Government of India. They offer pre-determined interest rates that are reset periodically. These bonds offer a secure and safe investment option, suitable for risk-averse investors. The Bonds shall be repayable on the expiration of 7 years from the date of issue, making it a suitable long-term investment option. Some benefits of investing in Savings Bonds are as follows:
- Online and offline application:
You can apply either online or offline. In the online procedure, you can apply for FRSBs on your bank’s official website, while for an offline application, you can visit your bank branch. Keep in mind that in case of online application Joint account, HUF or minor applicant are not permitted.
Things to keep in mind while investing
- These bonds come with a 7-year maturity period and offer a floating interest rate.
- Interest is reset every six months - in January and July.
- Not tradable or transferable and cannot be used as collateral for loans.
Taxation of Floating Rate Savings Bonds
The interest earned on RBI Savings Bonds is taxable under the Income Tax Act of 1961.
- You will pay taxes on that interest based on your income tax bracket.
- Tax Deducted at Source (TDS) will be applicable to interest payout.
- In case of other tax exemptions, declare them in your application.
Note: RBI Floating Rate Savings Bonds are completely exempt from wealth tax. However, the principal investment is not tax-deductible.
RBI Floating Rate Bond Interest Rates
- The interest on the bonds is paid out twice a year- on January 1st and July 1st.
- The interest paid out on January 1st and July 1st will be linked to the prevailing NSC (National Saving Certificate) interest rates, with an additional 35 basis point boost.
- The current interest rate on National Savings Certificates is 7.7%. As of January 1, 2024, Fixed Rate Savings Bond (FRSB) holders can earn a better rate of 8.05%.
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Steps to invest
You can invest in RBI Floating Rate Savings Bonds via Axis Bank Internet Banking , Axis Mobile App or by simply using your registered mobile number
How to invest in RBI Floating Rate Savings Bonds online?
- 01
Visit the Axis Bank Internet Banking page.
- 02
Log in to your account & Select “Investments”
- 03
Click on “Savings Bonds”.
- 04
Enter the investment details, including the investment amount and bank account number.
- 05
Add a nominee.
- 06
Mark the T&C checkbox and review the provided details.
- 07
Click on “Confirm”.
- 08
Verify the OTP received on your registered mobile number to complete the application process.
How to invest in RBI Floating Rate Savings Bonds via Mobile Banking?
Open the Axis Bank Mobile Banking app on your smartphone.
- 01
Log in to your account.
- 02
Select "Investments" Click on RBI Floating Rate savings Bond.
- 03
Enter the required investment details, including the investment amount and bank account.
- 04
Add a nominee.
- 05
Mark the T&C checkbox and review the provided detail.
- 06
Click on Proceed.
- 07
Verify the OTP received on your registered mobile number to complete the process.
Premature withdrawal allowed for Senior Citizen
Premature withdrawal is allowed for senior citizens in RBI Floating Rate Savings Bond as per the below slab:
- 60–70 years – 6 years
- 70–80 years – 5 years
- 80 years and above – 4 years
Please Note: A penalty of 50% of the interest due for the last six months may be applicable upon premature withdrawal.
Frequently Asked Questions
There are many reasons to invest in RBI FRSBs. For one, you can benefit from a high interest rate – the interest on such bonds is payable on January 01 and July 01 each year and the payable interest is linked to the current National Savings Certificates (NSC) interest rates. FRSBs pay 35 basis points more than the NSC rates. Since the bonds have a maturity period of 7 years, you can invest in it for a long-term period.
Investors seeking a low to moderate risk investment can invest in RBI FRSBs. It is also suitable for those investors seeking a regular source of income after retirement, due to the secured nature of the investment, option to receive regular interest payouts, and option for pre-mature withdrawal, subject to conditions.
RBI FRSBs have a lock-in period of 7 years, after which they mature. For senior citizens, the lock-in period is lower. It is 6 years for investors between 60-70 years of age, 5 years for those in the age group of 70-80 years and 4 years for investors above 80 years of age. In case the investor is a senior citizen and wants to make an early withdrawal, a penalty will be charged.
The interest earned on RBI FRSBs is taxable. When the interest is paid out, it is considered taxable income and will be taxed as per your applicable income tax slab. And as per the rules for interest income, Tax Deducted at Source (TDS) is also applicable.
The interest on RBI FRSBs is payable on a semi-annual basis from the date of issue of bonds, till June 30 or December 31. After that, the interest for the period ending between June 30 and December 31 will be payable on a semi-annual basis on July 01 and January 01, respectively.
Your KYC (Know Your Customer) is essential while making savings bond investments. These will include a proof of address and a proof of identity, as specified by the bank. Apart from these, you will need the following documents to invest in savings bonds:
- The duly filled application form
- A cancelled blank cheque
- The investment contribution/amount
RBI FRSBs are non-tradable and non-transferable. Therefore, you cannot use these bonds for availing of a loan from non-banking companies, banks or any other financial institution.
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