RBI Revises Rules For Floating Rate Savings Bonds: Key Changes Investors Should Know

The Reserve Bank of India (RBI) has revised the operational guidelines of Floating Rate Savings Bonds, 2020 (Taxable), replacing the previous 2020 framework. The revised regulations, published on April 2, 2026, which came into immediate effect, aim to streamline the processes and improve the process of investors servicing using digital access.

Interest Rate and Payment Cycle

The interest rate is still attached to the National Savings Certificate (NSC) rate and a fixed spread of 0.35 per cent. This is equivalent to 8.05 per cent at present.

The interest will be paid on a half-year basis, on January 1, and July 1. The investor will be credited directly with the payments in his/her bank account. The rate will be re-established periodically according to the alterations in the small savings rates, since it is benchmarked to NSC.

Maturity and Redemption

The bonds have a maturity period of seven years from the date of issuance. The principal will be returned upon maturity and no interest will be charged after that date.

RBI has also explained how premature redemption is done. Although the eligibility requirements are the same, the updated regulations are intended to facilitate operations at the receiving offices (ROs), such as banks, and minimise the turnaround time.

Online Access and Investor Services

The new rules require ROs to roll out digital facilities on specific timelines. This includes online submissions of applications and holding of bonds using the Bond Ledger Account (BLA).

Investors should be in a position to access BLA details, change nominee details, and make requests of premature redemption online. Documents, such as Certificate of Holding (CoH), interest statements, redemption payment information, and Tax Deducted at Source (TDS) certificates will also be accessible digitally. Such services need to be implemented by December 31, 2026.

Nomination Process

The updated system gives a more precise guideline on nomination, such as adding, amending or withdrawing nominees. The revisions aim to streamline the claims and enhance transparency to investors and beneficiaries.

Taxation

The interest earned on these bonds is subject to full taxation according to the rates of income tax. Unless the investor is exempt according to the current regulations, TDS will be deducted.

The new guidelines have maintained the core features of Floating Rate Savings Bonds, but have introduced more transparent procedures with online access capacity using ROs.