RBI Retains Interest Rate at 8.05% on Floating Rate Savings Bonds for July–December 2025.
Banking & Finance
On July 1, 2025, the Reserve Bank of India (RBI) announced that the interest rate on its Floating Rate Savings Bonds, 2020 (Taxable) [FRSB 2020 (T)] will remain unchanged at 8.05% for the July 1 to December 1, 2025 period.
- The interest payment for the July–December cycle will be credited on January 1, 2026. The current rate of 8.05% is pegged 0.35% higher than the National Savings Certificate (NSC) rate, which currently stands at 7.70%, offering retail investors a slightly higher return.
- The FRSB interest rate is reset every six months based on changes in the NSC rate. This semi-annual revision ensures that investors benefit from future increases in the benchmark NSC interest rate, while the rate remains fixed for each declared period.
- Floating Rate Savings Bonds (FRSBs) are government-backed fixed-income instruments, designed specifically for retail investors who seek long-term capital safety and predictable returns. These bonds are not tradable and cannot be used as collateral for loans, adding to their secure nature.
Main Point :- (i) The FRSB comes with a 7-year tenure, and the minimum investment required is ₹1,000, with no upper investment limit. Premature withdrawal is not allowed for general investors, reinforcing its role as a committed long-term savings product.
(ii) However, senior citizens are permitted early withdrawal after a specified lock-in period (which varies by age), subject to a penalty of 50% of the interest earned in the last six months. This special exit clause offers flexibility while preserving fiscal discipline.
Governor : Sanjay Malhotra
Headquarters: New Delhi
____________________________
