The Reserve Bank of India (RBI) has officially announced that the interest rate on Floating Rate Savings Bonds, 2020 (Taxable) for the period January 1, 2026 to June 30, 2026 will remain unchanged at 8.05 percent per annum. The interest for this six-month period will be paid to investors on July 1, 2026.
This decision provides stability to investors who are already invested in this government-backed scheme and continues to make it an attractive long-term savings option.
Latest FRSB Interest Rate 2026
According to the RBI release, the coupon rate for the current half-year stands at 8.05 percent, which is calculated as 7.70 percent NSC rate plus a spread of 0.35 percent. This rate is unchanged from the previous half-year, offering consistent returns to bondholders.
The interest rate structure ensures that investors benefit from market-linked returns while enjoying the safety of a government investment.
How the Interest Rate is Determined
The interest rate on Floating Rate Savings Bonds is reset every six months. This rule has been in place since January 1, 2021. The rate is fixed at a spread of 35 basis points above the prevailing National Savings Certificate (NSC) rate.
This means the bond’s interest automatically moves up or down depending on changes in the NSC rate. When NSC rates increase, FRSB returns also rise, and when NSC rates fall, FRSB returns adjust downward. This structure helps investors maintain purchasing power over time.
Key Features of FRSB in Detail
One of the biggest strengths of Floating Rate Savings Bonds is their government backing, which makes them one of the safest investment options available in India. Since the returns are linked to NSC, investors are protected against major market fluctuations and inflation trends.
The bonds offer interest payments twice a year, on January 1 and July 1, providing regular income for investors, especially retirees and senior citizens.
Another important feature is that the scheme allows premature withdrawal for senior citizens above the age of 60, subject to certain penalties. This flexibility is particularly helpful for retirement planning.
The scheme has no upper investment limit, allowing high-net-worth individuals to invest any amount based on their financial goals. However, the bonds are non-transferable and cannot be traded in the secondary market, meaning they must be held till maturity except in cases of permitted early exit.
The interest earned from these bonds is fully taxable according to the investor’s income tax slab. Unlike NSC, the interest is not eligible for any tax deduction or exemption.
Understanding the Role of NSC
The National Savings Certificate (NSC) is a fixed-income government scheme available at post offices with a maturity period of five years. It offers a fixed interest rate that is compounded annually and provides tax benefits under Section 80C of the Income Tax Act.
Since FRSB interest is linked to NSC, investors in these bonds benefit whenever the government increases NSC rates. However, they should also be aware that if NSC rates fall in the future, returns on FRSB will decline as well.
Why Investors Prefer Floating Rate Savings Bonds
Investors choose Floating Rate Savings Bonds mainly because of their high safety, predictable returns, and long-term stability. The scheme is especially suitable for conservative investors, retirees, and people seeking regular income without exposure to stock market risk.
The current 8.05 percent return makes it more attractive than many fixed deposits offered by banks, while maintaining a much higher level of security.
Conclusion
With the RBI maintaining the interest rate at 8.05 percent for January–June 2026, Floating Rate Savings Bonds continue to be one of the strongest long-term investment options in India. The combination of government security, market-linked returns, and regular income makes this scheme an excellent choice for investors looking for financial stability and steady growth.