The Reserve Bank of India (RBI) offers various investment options to help individuals grow their savings securely. One such option is the Floating Rate Savings Bonds (FRSB). This scheme is a safe and government-backed investment opportunity for risk-averse investors looking for a steady income.
What is the FRSB RBI Scheme?
The Floating Rate Savings Bonds, 2020 (Taxable) is a savings instrument introduced by the Government of India through the RBI. These bonds offer an interest rate that fluctuates over time, unlike fixed-rate bonds, making them unique in the financial market.
Key Features of FRSB RBI Scheme
1. Interest Rate
- The interest rate on FRSB is linked to the prevailing National Savings Certificate (NSC) rate with an additional spread of 0.35%.
- Interest is reset every six months, ensuring returns adjust according to market conditions.
- Currently, the interest rate is subject to revision every January 1 and July 1.
2. Tenure
- The bond has a lock-in period of 7 years from the date of issue.
- Premature withdrawal is permitted for senior citizens based on their age.
3. Minimum and Maximum Investment
- The minimum investment amount is Rs. 1,000.
- There is no maximum limit on investment.
4. Taxation
- Interest earned is fully taxable as per the investor’s income tax slab.
- TDS (Tax Deducted at Source) is applicable.
5. Interest Payout
- Interest is paid semi-annually on January 1 and July 1.
- The interest does not compound, meaning investors receive payouts instead of reinvestment.
6. Risk-Free Investment
- As a government-backed scheme, the FRSB RBI scheme is one of the safest investment options in India.
Who Should Invest in FRSB?
- Risk-averse investors looking for a secure and stable income.
- Senior citizens who need periodic payouts.
- Investors seeking an alternative to fixed deposits with a flexible interest rate.
- Those in higher tax brackets should consider post-tax returns before investing, as interest is taxable.
How to Invest in FRSB RBI Scheme?
You can invest in Floating Rate Savings Bonds through:
- Public and private sector banks (except regional rural banks and cooperative banks).
- The RBI Retail Direct platform.
Conclusion
The FRSB RBI Scheme is an excellent investment option for those looking for a risk-free and dynamic interest rate-based savings plan. With government backing and periodic interest revisions, it offers a secure way to grow wealth while keeping pace with market changes.
If you’re looking for a stable and government-secured investment, the Floating Rate Savings Bonds could be a great addition to your portfolio. Always consult a financial expert before investing to ensure it aligns with your financial goals.