RBI Floating Rate Savings Bonds at 8.05%: Full Review (July–December 2026)
The RBI Floating Rate Savings Bond pays 8.05% for the July–December 2026 half, the highest sovereign-guaranteed headline rate available to Indian retail investors. That’s comfortably above 7-year G-secs at around 6.7% and above essentially every bank FD. The premium exists for reasons, and here they are without the sales pitch.
The product in one table
| Feature | Detail |
|---|---|
| Issuer | Government of India, via the RBI |
| Current rate | 8.05% p.a. (1 Jul – 31 Dec 2026) |
| Rate formula | NSC rate + 0.35%, reset every 1 Jan and 1 Jul |
| Tenure | 7 years, non-tradable, non-transferable |
| Payout | Half-yearly (1 Jan / 1 Jul), with no cumulative option |
| Minimum | ₹1,000, no maximum |
| Tax | Interest at slab, 10% TDS above ₹10,000/yr |
| Early exit | Only for ages 60+, see below |
| Where to buy | RBI Retail Direct, SBI and major banks |
The 8.05% comes from the Jul–Sep 2026 NSC rate of 7.70% plus the fixed 35 bps spread. Run the payout numbers for your amount and slab in the FRSB calculator.
What “floating” means for you
Your rate is glued to NSC, which the government resets quarterly, while the bond reads it half-yearly. Two consequences follow.
In a falling-rate world, which is where mid-2026 sits with the repo at 5.25% after the 2025 cutting cycle, small-savings rates have been held up so far for political-economy reasons, but they can follow market rates down. Your 8.05% is a snapshot rather than a promise, so model any long-term plan at NSC-minus-something rather than at 8.05% forever.
In a rising-rate world, the FRSB is one of the few instruments that ratchets upward on its own, which is the mirror image of an FD locked in at the bottom.
The useful mental model is that you’re buying the government’s small-savings policy rather than a market rate. That policy has historically stayed sticky-high relative to G-secs, and the stickiness is where the FRSB’s edge comes from.
The lock-in is the price of admission
If you’re under 60, the money is gone for seven years. No secondary market, no pledge, no exit. Senior citizens get penalty exits, forfeiting 50% of the last coupon, after 6 years for ages 60–70, 5 years for 70–80 and 4 years for 80+.
Inflation is the quiet risk in any long nominal lock. 8.05% feels excellent against 4% CPI and much less so if inflation returns to 7%.
Taxation, where the shine dulls
Interest is fully taxable at slab and always paid out rather than compounded, with 10% TDS above ₹10,000 a year. Form 121 avoids the TDS if you’re below the taxable limit, and the details are in the taxation guide. At the current rate:
| Slab | Post-tax yield |
|---|---|
| 0% | 8.05% |
| 10% | 7.21% |
| 20% | 6.38% |
| 30% | 5.54% |
At the 30% slab, 5.54% post-tax with a seven-year lock competes directly with discount G-secs, whose pull to par gets 12.5% LTCG treatment, and it loses on liquidity. At the 0–10% slabs it’s close to unbeatable for safe income. That table settles most FRSB decisions on its own.
Who should buy
Retirees in low slabs who want the maximum safe payout. It’s a strong fit, arguably better than SCSS once you’re past that scheme’s ₹30 lakh cap, and without an FD’s bank risk.
Anyone parking family money in the 0–15% slabs with a seven-year horizon and no need for liquidity.
Who should think twice
30%-slab professionals. Run the FD vs bond comparison against discount G-secs first, because the post-tax gap is smaller than the sticker rate suggests and you’re paying for it with liquidity.
Accumulators who don’t need income. Payouts force a reinvestment decision 14 times over the life of the bond. NSC, which compounds, or growth-oriented debt may suit better.
Anyone who might need the money before they turn 60 plus another seven years. There’s no emergency hatch here, so keep the emergency layer in T-bills instead.
How to buy in 10 minutes
Use RBI Retail Direct, the same free account that buys T-bills and G-secs. Go to “Floating Rate Savings Bonds,” enter an amount, and pay by UPI or net banking. Banks offer the same product in-branch and online. Interest lands in your linked account each 1 January and 1 July.
Rates verified against the July 2026 reset. The rate table on this page gets updated each January and July when the NSC and FRSB resets are announced.
Educational content, not investment advice. Tax rules current for FY 2026-27 to the best of our knowledge, but verify with a professional before acting. See the full disclaimer.