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Floating Rate Savings Bonds

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The government has announced the launch of Floating Rate Savings Bonds, 2020 (Taxable). 93 branches of Bank of Baroda have authorized for subscription of this scheme. To see a details list of these branches click here

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  • Eligibility :

    The Bonds may be held by:-

    1. A person resident in India, in her or his individual capacity, or in individual capacity on joint basis, or in individual capacity on any one or survivor basis, or on behalf of a minor as father/mother/legal guardian.
    2. A Hindu undivided family.
  • There will be no maximum limit for investment in the Bonds.
  • Income Tax: Interest on the Bonds will be taxable under the Income Tax Act, 1961 as applicable according to the relevant tax status of the Bonds holder(s).
  • The Bonds will be issued for a minimum amount of Rs. 1000 (face value) and in multiples thereof. Accordingly, the issue price will be Rs. 1,000 for every Rs. 1,000 (nominal) face value.
  • Nomination facility available.
  • The interest rate of the bond, would be reset half yearly (in sync with the coupon payment date) starting with Jan 1st, 2021 and thereafter every July 1st and Jan 1st and is linked/pegged with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate.
  • The coupon rate on FRSB 2020 (T) for period July 1,2024 – December 31, 2024 and payable on January 01, 2025 has been reset at 8.05% (7.70% +0.35%).
  • The Bonds held to the credit of Bond Ledger Account (BLA) of an investor shall not be transferable, except transfer to a nominee(s) legal heir in case of death of the holder of the Bonds.
  • The interest on the Bonds will be payable at half yearly intervals up to 30th June and 31st December.
  • Tax will be deducted at source while making payment of interest on the Bonds from time to time and credited to Government Account.
  • The Bonds shall not be tradable in the secondary market and shall not be eligible as collateral for availing loans from banks, financial Institutions and non-banking financial companies.
  • The Bonds shall be repayable on the expiration of 7 years from the date of issue.
  • Premature encashment in respect of the Bonds shall be allowed for individual investors in the age group of 60 years and above.

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Frequently Asked Questions (FAQs)

  • Are Floating rate bonds a good investment?

    Yes, the floating rate bonds are a good investment.

  • How do I invest in FRSB (Floating Rate Savings Bonds)?

    One can invest in FRSB bonds through authorised branches of BoB or by visiting online.

  • How do you buy a floating rate bond?

    Customer has to approach a branch and the branch will send application to authorised branch for opening of a bond.

  • Is floating rate savings bond interest taxable?

    Interest on the Bonds will be taxable under the Income-tax Act 1961, as applicable, according to the relevant tax status of the bond's holder.

  • What is the duration of floating rate bond?

    The Bonds shall be repayable on the expiration of 7 years from the date of issue.

  • When should you invest in floating rate funds?

    Anytime you can invest in floating rate funds.

  • Are Floating rate bond funds safe?

    Yes, floating rate bond funds are safe.

  • How often does a floating rate ROI change?

    A floating rate ROI reset half yearly.

  • Are floating-rate bonds fixed-income?

    Yes, floating-rate bonds fixed-income depending upon prevailing ROI at the time.

  • How does interest on a floating rate loan get calculated?

    The bond's coupon/interest rate would be re-set half yearly (in sync with the coupon payment date) beginning January 1st and thereafter every 1st July and Jan is linked/pegged with the prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 basis points over the respective NSC rate.

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