RBI Floating Rate Savings Bond interest for July

The interest rate for RBI Floating Rate Savings Bonds for the period July to December 2025 will continue to earn same as before. The RBI Floating Rate Savings Bond (FRSBs), 2020 (Taxable) will offer 8.05% interest rate from July to December 2025. The interest rates are unchanged from January to June 2025 rates. The interest rate of the RBI Floating Rate Savings Bond is linked to the interest rate of the National Savings Certificate (NSC), a small savings scheme backed by the government.

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The government announced no change in the interest rates for small savings schemes like Public Provident Fund (PPF), National Savings Scheme (NSC), Senior Citizen Savings Scheme (SCSS) and others on June 30, 2025.

The interest rate of RBI Floating Rate Savings Bonds is always set as 0.35% higher than the NSC interest rate. For July to September 2025, the interest rate on NSC is 7.7% per annum. The next review of interest rate on NSC is on September 30, 2025. If the NSC interest rate is revised downwards on the next review, the impact on the interest rate of RBI floating bonds will be felt only on January 1, 2026. This is the date when the interest rate on RBI floating rate bonds will reset.

According to RBI press release dated July 1, 2025, “Accordingly, the coupon rate on FRSB 2020 (T) for the period July 01, 2025 to December 31, 2025 and payable on January 01, 2026 remains at 8.05% (7.70%+0.35%), unchanged from the previous half-year. “

When will you get the interest on RBI floating rate savings bond?

The interest rate on RBI floating-rate savings bonds is not fixed. It is reset twice every year i.e every six months.
When the interest rate on NSC rises, the RBI floating rate savings bond will also pay a higher interest rate. Similarly, if the NSC interest rate falls, so will the interest rate on the RBI Floating Rate Savings Bond.

The interest is payable semi-annually. The interest on these bonds is paid on January 1 and July 1 every year.

Note that the interest received on such bonds is taxable in the hands of the investors. Also, you cannot claim any tax deduction for investing in these bonds. Further, TDS will be deducted on the interest received from these bonds, if the annual interest exceeds Rs 10,000.

RBI floating rate savings bond: What is the minimum and maximum investment allowed?

The minimum subscription amount for the RBI floating rate savings bond is Rs 1,000, with subsequent investments in multiples of Rs 1,000. There is no maximum limit. You cannot borrow against the RBI Floating Rate Savings Bond 2020 (Taxable) bonds.

What is the tenure of the RBI floating rate savings bond?

According to the PIB release on June 26, 2020, “RBI floating rate bond has a tenure and lock-in period of seven years.” There is no premature withdrawal option, but senior citizens get the option to prematurely withdraw money with a penalty after a minimum lock-in period. For those aged 60 to 70, the lock-in period is six years. For those aged 70 to 80, the lock-in period is five years. Those aged above 80 can withdraw their investment after four years from the date of investment.

Is there a penalty for premature withdrawal of the bond?

According to the RBI notification date on June 26, 2025, “The Bonds shall be repayable on the expiration of 7 (Seven) 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, subject to submission of document relating to date of birth of the investor in support of age to the satisfaction of the issuing bank, after minimum lock in period from the date of issue as indicated below:

(a)Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.

(b) Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.

(c)Lock in period for investors in the age of 80 years and above shall be 4 years from the date of issue.

In case of joint holders or more than two holders of Bonds, any one of the holders shall fulfill the above conditions of eligibility. After aforesaid minimum lock in period from the date of issue, an eligible investor can surrender the bonds at any time after the 12th 10th and 8th half year corresponding to the respective lock in period but redemption payment will be made on the following interest payment due date. Thus, the effective date of premature encashment for eligible investors will be 1st January and 1st July every year. However, 50% of interest due and payable for the last six months of the holding Period will be recovered in such cases.”