Rbi Floating Rate Savings Bonds Calculator

by

RBI Floating Rate Savings Bonds Calculator

Min: ₹1,000 | No upper limit
Current rate is often NSC + 0.35%

Investment Projection

Half-Yearly Interest Payout

Annual Income

Total Interest (7 Years)

Maturity Value (Principal + Interest)

*Note: These bonds pay interest every 6 months (Jan 1 & July 1). Total interest assumes the coupon rate remains constant for the full 7-year tenure, though it is subject to change semi-annually.

function calculateBondYield() { var principal = parseFloat(document.getElementById('principalAmount').value); var rate = parseFloat(document.getElementById('couponRate').value); if (isNaN(principal) || isNaN(rate) || principal < 1000) { alert("Please enter a valid principal amount (min ₹1,000) and coupon rate."); return; } // Calculation Logic // FRSB (Taxable) 2020 pays interest semi-annually. var semiAnnualPayout = (principal * (rate / 100)) / 2; var annualIncome = semiAnnualPayout * 2; var totalInterest = annualIncome * 7; var maturityValue = principal + totalInterest; // Display Results document.getElementById('semiAnnualResult').innerText = "₹" + semiAnnualPayout.toLocaleString('en-IN', {maximumFractionDigits: 2}); document.getElementById('annualResult').innerText = "₹" + annualIncome.toLocaleString('en-IN', {maximumFractionDigits: 2}); document.getElementById('totalInterestResult').innerText = "₹" + totalInterest.toLocaleString('en-IN', {maximumFractionDigits: 2}); document.getElementById('totalMaturityResult').innerText = "₹" + maturityValue.toLocaleString('en-IN', {maximumFractionDigits: 2}); document.getElementById('bond-results').style.display = 'block'; }

Understanding the RBI Floating Rate Savings Bonds (FRSB) 2020

The RBI Floating Rate Savings Bonds, 2020 (Taxable) are a secure investment instrument issued by the Government of India. Unlike Fixed Deposits where the interest rate is locked for the tenure, the FRSB has an interest rate that changes every six months. This makes it an excellent hedge against inflation and rising interest rates.

How the Interest Rate is Determined

The "Floating Rate" is the unique selling point of these bonds. The interest rate is linked to the National Savings Certificate (NSC) rate. The RBI sets the FRSB coupon rate at 0.35% above the prevailing NSC rate. The rate is reset twice a year on January 1st and July 1st.

Key Features of RBI Floating Rate Bonds

  • Tenure: The bonds have a fixed lock-in period of 7 years.
  • Minimum Investment: You can start with as little as ₹1,000.
  • Maximum Investment: There is no upper limit on how much you can invest.
  • Payout Frequency: Interest is paid out semi-annually on January 1st and July 1st. There is no cumulative option.
  • Safety: Since these are sovereign bonds, they carry the highest level of safety (zero default risk).
  • Taxation: The interest earned is fully taxable as per your income tax slab. TDS (Tax Deducted at Source) is applicable.

Calculation Example

If you invest ₹10,00,000 (10 Lakhs) in the RBI Floating Rate Savings Bonds at a current rate of 8.05%:

  • Half-Yearly Payout: (10,00,000 × 8.05%) / 2 = ₹40,250
  • Annual Income: ₹40,250 × 2 = ₹80,500
  • Total Interest over 7 Years: ₹80,500 × 7 = ₹5,63,500 (Assuming rate stays at 8.05%)

Who Should Invest?

These bonds are ideal for senior citizens or investors looking for a steady, periodic stream of income with absolute capital safety. Since the rate is floating, it is particularly attractive when interest rates in the economy are expected to rise.

Premature Withdrawal Rules

While the standard tenure is 7 years, premature encashment is allowed only for senior citizens after a specific minimum holding period:

  • Age 60 to 70: Minimum holding period of 6 years.
  • Age 70 to 80: Minimum holding period of 5 years.
  • Above Age 80: Minimum holding period of 4 years.

Leave a Comment