{"id":14217,"date":"2026-05-27T07:39:38","date_gmt":"2026-05-27T07:39:38","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/floating-rate-savings-bonds\/"},"modified":"2026-05-27T07:39:38","modified_gmt":"2026-05-27T07:39:38","slug":"floating-rate-savings-bonds","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/floating-rate-savings-bonds\/","title":{"rendered":"Floating Rate Savings Bonds"},"content":{"rendered":"

Floating Rate Savings Bonds<\/a> (FRSB) are government savings instruments issued by the Reserve Bank of India where the interest rate is not fixed but resets periodically based on a reference rate. The current reference is the National Savings Certificate<\/a> (NSC) rate plus a spread. FRSB are designed for retail investors seeking government-backed savings with rates that adjust when market rates change.<\/p>\n

What Are Floating Rate Savings Bonds<\/a>?<\/h2>\n

The Government of India introduced FRSB in 2020 as a replacement for the earlier 7.75% Savings Bonds (which had a fixed rate). The floating rate design ensures that investors benefit when interest rates rise, without having to reinvest in new instruments.<\/p>\n

Key Features<\/h2>\n

– **Issuer**: Reserve Bank of India on behalf of the Government of India
\n– **Interest rate**: NSC rate + 0.35% (reset every 6 months on January 1 and July 1)
\n– **Tenure**: 7 years
\n– **Minimum investment**: Rs 1,000; no maximum limit
\n– **Interest payment**: semi-annual (January 1 and July 1)
\n– **Premature closure**: not allowed for most investors; allowed for seniors after a specified period
\n– **Tradeable**: not tradeable or transferable<\/p>\n

How Interest Rates Work<\/h2>\n

The interest rate resets every six months. For example:
\n– If the NSC rate is 7.7%, the FRSB rate is 8.05% (7.7% + 0.35%)
\n– If NSC rate rises to 8%, FRSB rate becomes 8.35%<\/p>\n

This means investors benefit from rate hikes during the 7-year tenure.<\/p>\n

Who Should Invest in FRSB?<\/h2>\n

– Conse<\/a>rvative investors who want sovereign backing
\n– Those who believe interest rates will rise over their investment horizon
\n– Retirees or near-retirees looking for semi-annual income at government-safe rates
\n– Investors who have exhausted PPF, NSC, and Senior Citizen Savings Scheme limits<\/p>\n

FRSB vs PPF vs Senior Citizen Savings Scheme<\/h2>\n

| Feature | FRSB | PPF | SCSS |
\n|———|——|—–|——|
\n| Rate | Floating | Fixed (government set) | Fixed (government set) |
\n| Tenure | 7 years | 15 years | 5 years |
\n| Tax<\/a> on interest | Taxable | Tax-free | Taxable |
\n| Section 80C<\/a> | No | Yes | Yes |
\n| Liquidity<\/a> | Low | Partial (after 7 yrs) | Moderate |<\/p>\n

Practical Example<\/h2>\n

Geeta, a retired teacher, invests Rs 10 lakh in FRSB in July 2024 at an initial rate of 8.05%. She receives Rs 4,025 every six months (semi-annual interest). In January 2025, the NSC rate is revised upward, and her FRSB rate resets to 8.4%. Her next payment increases accordingly. Over 7 years, she benefits from rate increases without reinvestment risk.<\/p>\n

Key Takeaways<\/h2>\n

– FRSB is a government savings bond with an interest rate that resets every 6 months based on NSC + 0.35%
\n– 7-year tenure with semi-annual interest payments
\n– No tax benefit under Section 80C; interest income is taxable
\n– Benefits investors when interest rates rise; resets ensure ongoing competitiveness
\n– Suitable for conservative investors who have exhausted other tax-saving instruments<\/p>\n","protected":false},"excerpt":{"rendered":"

Floating Rate Savings Bonds (FRSB) are government savings instruments issued by the Reserve Bank of India where the interest rate is not fixed but resets periodically based on a reference rate. The current reference is the National Savings Certificate (NSC) rate plus a spread. FRSB are designed for retail investors seeking government-backed savings with rates […]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-14217","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"Floating Rate Savings Bonds (FRSB) are government savings instruments issued by the Reserve Bank of India where the interest rate is not fixed but resets periodically based on a reference rate. The current reference is the National Savings Certificate (NSC) rate plus a spread. FRSB are designed for retail investors seeking government-backed savings with rates…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14217\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}