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Sunday, October 17, 2021

FRSB 2020 (T): 7.15% return guaranteed in this government bond; FD, RD, more than KVP, check eligibility


Should You Invest in Floating Rate Savings Bonds, 2020 (Taxable): After the continuous reduction in the repo rate by the Reserve Bank, banks have also reduced their deposit rates. At the same time, the government has reduced interest rates on small savings. In fact, to reduce the impact of COVID-19 on the world economy, the Central Banks are reducing interest rates. Recently, events like Franklin Templeton Crisis in the market have also alerted debt fund investors. In such a situation, investors are looking for a scheme with safe returns. In such a situation, the Floating Rate Savings Bond issued by Reserve Bank of India, 2020 (Taxable) can be a better option. It is getting higher returns than schemes like FD, RD or KVP. At the same time, the government has sovereign guarantee on it.

Rate of Interest

The RBI has issued a new floating rate savings bond, which currently has an interest rate of 7.15 per cent. However, the interest rate on these will change every 6 months. The interest rate will change every 6 months on January 1 and July 1. There is no option to pay lump sum interest. This means that on the day the interest is payable on the bond, it will be credited to the bank account of the investor. The coupon rate will be linked to the rate of National Saving Certificate (NSC).


Any person living in the country (including joint holding) and HUF can invest in it. Non-resident Indians (NRIs) are not allowed to buy these bonds. You can buy this bond as a parent in the name of the minor.

Investment of at least Rs 1000 is necessary

An investment of at least 1000 rupees is necessary in these bonds. There is no maximum investment limit. After minimum investment, you can invest any amount in multiples of 1000 rupees. Their duration is 7 years since release. Premature redemption is allowed for senior citizens of certain categories.


This interest is taxable on the bond. Tax will have to be given according to the income tax slab you will come across. Apart from this, TDS will also be applicable on interest income.


This bond is not transferable. This transfer can be done only in the name of the nominee only after the death of the investor.


These bonds cannot be traded in the stock market. Nor can these loans be taken from banks, financial institutions, NBFCs etc.

Investment method

These bonds can be purchased from any government bank. Apart from these, they can also be purchased from IDBI Bank, Axis Bank, HDFC Bank and ICICI Bank. Bonds are allowed to be purchased in electronic form only. If investors want, they can also buy them in cash. But, its maximum limit is 20 thousand rupees.

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Nisha Chawlahttps://www.businesskhabar.com/
She is an expert in Banking, Finance and working with an international bank. She sharing her ideas and knowledge with Business Khabar.
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