RBI Floating Rate Bonds

What is it

These are savings bonds issued directly by the RBI, with an interest rate that resets every 6 months in line with the prevailing government small savings rate — so your return moves up or down with the broader rate environment rather than staying fixed for 7 years. There's no upper limit on how much you can invest.

RBI Floating Rate Savings Bonds replaced the earlier 7.75% RBI Savings Bonds in 2020, switching from a fixed rate to one that resets every 6 months in line with the National Savings Certificate rate plus a spread — making them more responsive to changing interest rate cycles.

Who it's best for

Conservative investors who want government-guaranteed safety and don't need liquidity for 7 years.

Who should avoid it

You might need the money before 7 years — early exit is only allowed for senior citizens, and only after a minimum holding period.

Pros

• Backed directly by the Government of India — as safe as it gets
• No maximum investment limit, unlike SCSS or Sukanya Samriddhi
• Rate resets keep you aligned with prevailing interest rates

Cons

• 7-year lock-in with very limited premature exit options
• Interest is fully taxable, with no special exemption
• Rate can fall as well as rise at each reset — no guarantee it stays at today's level

Key ratios to check