RBI announces regarding its Floating Rate Bonds
When the Reserve Bank of India raises interest rates, the typical and average investor is concerned about where to invest when interest rates fall. The increase in repo rates has helped investors, particularly those who rely on fixed income assets. As interest rates rise, why not invest directly through the RBI? You will also receive reasonable interest, and the security of your investment is unparalleled in the country!
The Floating Rate Savings Bond 2020 is a risk-free investment that may be put alongside money market funds, sovereign bonds, and fixed deposits. This bond investment pays a reasonable rate of return. The RBI Floating Rate Savings Bond cannot be sold in the secondary market when it matures. Floating Rate Savings Bonds issued by the Reserve Bank are similarly not collateralized loans.
The Floating Rate Savings Bond 2020 is a program that is open to all individuals regardless of age and offers all the benefits of bank fixed deposits. Individuals and families can make investments and it is also possible for people under the age of 18 to deposit through their parents. The minimum investment is Rs.1,000 and there is no ceiling. The term is seven years and should be noted that there are no income tax deductions available for the investment. The interest rate on variable rate savings bonds is calculated by tying it to the interest rate on Post Office National Savings Certificates.
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The interest rate on Floating Rate Savings Bonds is reviewed by the RBI twice a year. It occurs every six months, between late June and late December. The bond always bears a 0.35% premium over the National Savings Certificate. The savings certificate’s interest rate is 7%, hence the bond’s interest rate is presently 7.35%. Interest will be paid on January 1st and July 1st of each year. The Reserve Bank Floating Rate Savings Bonds have a 7-year term. Regular investors are not permitted to withdraw their investment before maturity. There is some relief for older persons. For investors aged 60-70, the lock-in period is 6 years. Individuals aged 70-80 years old can withdraw after 5 years, while those above 80 years old can withdraw after 4 years.
Floating-rate savings bonds are available from public sector banks and a few private institutions. To begin investing in the RBI Floating Rate Savings Bond, no Demat account is necessary. Axis Bank pays 8.01%, IDFC First Bank pays 8%, IndusInd Bank pays 7.85%, HDFC Bank pays 7.75%, Punjab National Bank pays 7.75%, Karur Vysya Bank pays 7.65%, ICICI Bank pays 7.60%, Kotak Mahindra Bank pays 7.6%, and Indian Overseas Bank pays 7.50% on RBI bonds. In comparison, RBI Variable Rate Savings is quite reassuring and stable for people who invest cautiously and maturely.
