RBI Floating Rate
Savings Bond 8.05%

RBI Floating Rate Savings Bond 2020 (FRSB) is government-backed savings bond LAUNCHED 1 July 2020 to replace earlier 7.75% RBI Bonds. KEY POINTS: (1) ISSUER: Reserve Bank of India (RBI). (2) RATE FORMULA: NSC (National Savings Certificate) rate + 0.35% premium. Currently NSC 7.7% + 0.35% = 8.05%. Rate RESETS every 6 months as NSC rate changes. (3) NO MAXIMUM INVESTMENT LIMIT — invest unlimited amount. Highest unique feature vs SCSS (₹30L), PPF (₹1.5L/yr). (4) TENURE: 7 YEARS. (5) INTEREST PAYOUT: SEMI-ANNUAL (January 1 + July 1). Predictable cash flow. (6) MINIMUM INVESTMENT: ₹1,000. (7) ELIGIBILITY: Indian residents (NRIs NOT eligible). (8) TAX: Interest TAXABLE at slab rate. Bonds qualify for 80C? NO — Section 80C does not cover RBI Floating Rate Savings Bond. (9) NON-TRANSFERABLE: Cannot sell to others. Only nominee/legal heir inheritance allowed. (10) ELECTRONIC FORMAT: Held in RBI Bond Ledger Account (BLA) or demat. EXAMPLE: ₹50L invested at 8.05% = ₹2,01,250 semi-annual = ₹4,02,500 annual income. Significant for HNW retirees + risk-averse investors.

Both are RETIREMENT INCOME products. KEY COMPARISON: SCSS (Senior Citizen Savings Scheme): (1) RATE: 8.2% (slightly higher). (2) CAP: ₹30 LAKH per individual. (3) PAYOUT: QUARTERLY. (4) TENURE: 5+3 yrs. (5) ELIGIBILITY: 60+ only. (6) TAX BENEFIT: 80C ₹1.5L on contribution. RBI FLOATING RATE BOND: (1) RATE: 8.05% (slightly lower). (2) CAP: NO MAXIMUM — unlimited investment. (3) PAYOUT: SEMI-ANNUAL. (4) TENURE: 7 years. (5) ELIGIBILITY: any Indian resident (not age-restricted). (6) TAX BENEFIT: NONE on contribution. SCSS WINS for: Senior with ₹30L or less. Slightly higher rate + quarterly payout + 80C benefit makes SCSS clearly better. RBI BOND WINS for: HNW seniors with > ₹30L to invest. Once SCSS ₹30L cap reached, RBI Bond is the next-best for safe income. RECOMMENDATION FOR HNW RETIREE with ₹1 cr corpus: (a) ₹30L in SCSS (8.2% quarterly, ₹61,500/quarter income). (b) ₹50L in RBI Floating Rate Bond (8.05% semi-annual, ₹2L semi-annually). (c) ₹15L in PPF (7.1% tax-free 15-yr). (d) ₹5L in liquid funds (emergency). Combined: ~₹8L annual safe income + diversification. COMBINED STRATEGY makes more sense than picking one.

RBI BOND INVESTMENT ROUTES: (1) DESIGNATED BANKS (most practical): SBI, HDFC, ICICI, Axis, Bank of Baroda, PNB, Bank of India, Canara Bank, Union Bank, IDBI, others. Walk-in OR via Net banking (some banks). (2) RBI E-KUBER (advanced): institutional route, less retail-friendly. PROCESS: (1) Choose bank where you have savings account. (2) Submit RBI Bond application form (BLA-1 for new investor, BLA-2 for top-up). (3) Provide: PAN, Aadhaar, photograph, savings account details for interest credit. (4) Pay via cheque, DD, or net banking transfer. (5) Receive Bond Ledger Account (BLA) certificate (electronic) within 30 days. (6) Semi-annual interest auto-credit to linked savings account. JOINT ACCOUNT: With another resident — typically spouse, child, parent. Up to 3 joint holders. NOMINATION: Mandatory at application — nominee details for legal succession. ONLINE OPTION: SBI YONO + HDFC Net Banking + ICICI Bank net banking + others now support online RBI Bond application — fully digital. KYC + Aadhaar OTP verification, paperless. DOCUMENTATION: Maintain BLA certificate copy + bank statement showing interest credit (for ITR). Bond cannot be transferred — only succession via nominee.

RBI BOND INTEREST IS FULLY TAXABLE at applicable slab rate. NOT TAX-FREE. TAX TREATMENT: (1) Semi-annual interest added to 'Income from Other Sources' in ITR. (2) Combined with total income, slab tax applies (5/10/15/20/30%). (3) 4% Health + Education Cess on tax. (4) NO 80C deduction on contribution (unlike PPF/EPF/NSC/ELSS). TDS RULES: Banks deduct TDS @ 10% if annual interest > ₹10,000. Form 15G/15H submission can avoid TDS if total income below basic exemption. EXAMPLE: ₹25L invested at 8.05% = ₹2,01,250 annual interest. (a) TDS: ₹20,125 (10% × ₹2,01,250). (b) Taxable income: ₹2,01,250 (added to total income). (c) Tax computation: depends on total income + slab. (d) Refund via ITR if TDS exceeds actual liability. 80TTB INTERACTION FOR SENIORS: Senior citizens (60+) eligible for 80TTB ₹50K interest deduction (covers savings + FD + RBI bond interest combined). Old regime only. STRATEGIC: For retirees with ₹50L+ in RBI Bond generating ₹4L+ annual interest: tax burden ~₹50K-1L depending on other income + slab. NOT tax-efficient compared to PPF/SCSS+80C combination. PRIMARILY for HNW investors who've exhausted other tax-efficient options.

SENIOR CITIZEN PREFERENTIAL PROVISIONS in RBI Floating Rate Bond: (1) PREMATURE WITHDRAWAL ALLOWED for senior citizens (other investors: NO premature withdrawal). RULES: (a) AGE 60-70: After 6 years (lock-in reduced from 7 by 1 year). (b) AGE 70-80: After 5 years (lock-in reduced by 2 years). (c) AGE 80+: After 4 years (lock-in reduced by 3 years). (d) Other ages (< 60): full 7-year tenure mandatory. (2) PENALTY ON PREMATURE WITHDRAWAL: 50% of interest payable for last 6 months of completed half-year period. Modest penalty. (3) TYPICAL SCENARIO: 75-year-old retiree invests ₹25L in 2025. Can withdraw entire amount from 2030 (after 5 years), losing only ~₹1L of accrued interest (50% × ₹2L). (4) NO PREMATURE FOR REGULAR INVESTORS: < 60 years must hold full 7 years OR not withdraw at all. STRATEGIC: For elderly + chronic illness scenarios, RBI Bond's senior preferential withdrawal makes it MORE LIQUID than SCSS (5-yr rigid). Provides comfort for HNW elderly investors wanting safe income + emergency access. RECOMMENDATION: For 65+ HNW retiree, RBI Bond superior to other long-tenure debt options due to: (1) Unlimited investment. (2) Senior preferential withdrawal. (3) Government guarantee. (4) Solid 8.05% income.

NO — NRIs (Non-Resident Indians) are NOT eligible for RBI Floating Rate Savings Bond 2020. ELIGIBILITY: Indian RESIDENTS only. Includes: (1) Resident Indian individuals (single or joint). (2) HUFs. (3) Charitable institutions (some specific categories). NOT ELIGIBLE: (1) NRIs even with PIO/OCI status. (2) Foreign citizens. (3) Companies. (4) Partnership firms. (5) Trusts (except specified charitable). REASONING: RBI Bonds are domestic savings instruments backed by government for residents' savings. NRI access is restricted to ensure RBI controls FX flow + monetary policy. NRI ALTERNATIVES: (1) NRO bank FDs — taxable, DTAA TDS reduction. (2) Indian MFs via NRE/NRO. (3) Direct equity via PIS. (4) Real estate. (5) Tax-free bonds (limited availability now). RETURNING NRI: Once become Indian resident (post-RNOR), can invest in RBI Bonds. Time RBI Bond purchase after 2-3 year RNOR transition for optimal tax planning. IMPORTANT: Don't confuse with RBI Sovereign Gold Bonds (SGB) — NRIs ARE eligible for SGB but NOT for Floating Rate Savings Bond. Different instruments.

RBI BOND RATE = NSC RATE + 0.35% PREMIUM. NSC rate is reviewed QUARTERLY by Government of India. RBI Bond rate RESETS EVERY 6 MONTHS based on NSC rate prevailing at reset date. RESET DATES: (1) January 1 — uses Q4 (Oct-Dec) NSC rate. (2) July 1 — uses Q2 (Apr-Jun) NSC rate. EXAMPLE: If NSC rate is 7.7% in Q4 FY 2024-25, RBI Bond rate from January 2025 to June 2025 = 7.7% + 0.35% = 8.05%. RATE HISTORY: 8.05% (Jan-Jun 2025), 8.05% (Jul-Dec 2024 if NSC was 7.7%), 7.15% (Jul 2023 if NSC was 6.8%), 7.35% (Jan 2024). LIVE WITH FLOATING: Bond holder's interest payout adjusts every 6 months. Last semi-annual cycle benefits from new rate. IF RATES FALL: Your existing investment continues at currently set semi-annual rate. Next reset would be lower. IF RATES RISE: Your existing investment benefits from upward reset on next semi-annual cycle. STRATEGY: With current 8.05% near historical high, locking 7-year RBI Bond is attractive. If you believe rates may fall over next 5-7 years, RBI Bond floating mechanism may underperform fixed-rate alternatives. If rates will stay or rise, floating rate captures upside. NO CHANGE TO TENURE: 7-year tenure fixed regardless of rate changes.