RBI’s Floating Rate Savings Bond, 2020 (Taxable)
RBI’s Floating Rate Savings Bond, 2020 (Taxable)
Floating Rate Savings Bond 2020 is a distinguished investment option providing flexibility and security for your savings. With distinctive features and compelling benefits, this bond assures stability and potential returns amidst economic shifts. Explore why it's the ideal choice for astute investors.
Overview
The Floating Rate Savings Bond 2020 is a Government of India backed savings instrument that offers a variable interest rate, allowing your investment to adapt to prevailing market conditions. This ensures that your savings keep pace with changing interest rates, providing you with the potential for higher returns compared to fixed-rate bonds. Here are some highlights of FRSB, 2020:
- Safe investment option - Regular half-yearly income.
- Guaranteed returns - Regular half-yearly income.
- Highest rate of returns amongst non-market linked investment options.
- No maximum limit on the deposit amount.
- People of all the age groups can invest.
- Nomination facility.
- Premature exit option for Senior Citizen.
Advantages
Investing in the Floating Rate Savings Bond 2020 offers several advantages that make it an attractive option for individuals seeking stable and lucrative savings opportunities:
- Government Backing: As a government-backed bond, the Floating Rate Savings Bond 2020 guarantees the safety of your investment, making it a reliable choice for risk-averse investors.
- Inflation Protection: With a floating interest rate, your savings will be shielded from the erosive impact of inflation, ensuring that your investment maintains its value over time.
- Higher Potential Returns: The floating interest rate mechanism enables you to benefit from rising interest rates, potentially earning higher returns compared to fixed-rate bonds.
- Flexible Liquidity Options*: The bond provides the flexibility to redeem your investment after the lock-in period, allowing you to address unexpected financial needs or seize new investment opportunities.
Who should invest in Floating Rate Savings Bonds?
The RBI Floating Rate Savings Bond is a suitable investment option for a wide range of investors, including:
- Risk-averse investors: Investors seeking capital preservation and stable returns without exposing their savings to market volatility can benefit from the safety and competitive interest rate of these bonds.
- Retirees and senior citizens: Retirees and senior citizens looking for regular income can consider the RBI Floating Rate Savings Bond as a reliable source of interest income with low risk.
- Long-term savers: Individuals planning for long-term goals, such as education expenses, buying a house, or retirement, can use the bond’s seven-year tenure to grow their savings steadily.
- Countering inflation: The floating rate feature of these bonds allows investors to beat inflation as interest rates adjust to market changes, ensuring that the real value of their savings is maintained over time.
Features
| Item | Details |
|---|---|
| Limit of investment | Minimum ₹1000/- and in multiples of ₹1000/-. |
| Date of Issue of bonds | Date of receipt of subscription in cash (up to ₹20,000/- only), or date of realization of cheque /draft/ funds. |
| Forms of Bonds | Electronic form held in the Bond Ledger Account. |
| Interest | (i) Interest is payable semi-annually from the date of issue of bonds, up to 30th June / 31st December as the case may be, and thereafter half-yearly for period ending 30th June and 31st December on 1st July and 1st January respectively. (ii) The coupon rate payable for next half-year would be reset on 1st January 2021 and thereafter, every 1st July and 1st January. |
| Post Maturity Interest | Post Maturity Interest is not payable. |
| Bank account | It is mandatory for the investor/s to provide bank account details to facilitate payment of interest /maturity value directly to his/her/their bank account. |
| Tax benefits | Income from the bonds is taxable. Tax will be deducted at source while interest is paid. If an exemption under the relevant provisions of the Income Tax Act, 1961 is obtained, it may be declared in the Application Form. |
| Entry Age | No minimum entry age. In the case of Minors. FRSB can be purchased by parent/Legal guardians |
| Nomination Facility | The sole Holder or all the joint holders may nominate one or more persons as nominee in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulation, 2007, published in Part III, Section 4 of the Gazette of India dated December 1, 2007. |
| Maturity period | 7 years from the date of issuance. |
| Premature redemption |
|
| Transferability | The bonds are not transferable. |
| Tradability / Advances | The bonds are not tradable in the secondary market and also not eligible as collateral for availing loans. |
Eligibility
The Bonds may be held by -
- An individual -
- in his or her individual capacity, or
- in individual capacity on joint basis, or
- in individual capacity on any one or survivor basis, or
- on behalf of a minor as father/mother/legal guardian.
- A Hindu Undivided Family
- Non-Resident Indians (NRI)s are not eligible to invest in these bonds.
How to Apply?
OR
Contact your nearest IDBI Bank branch for further details and application forms.
Applying for the Floating Rate Savings Bond 2020 is a straightforward process. Follow these steps to invest in this remarkable savings instrument:
- Check Eligibility: Ensure that you meet the eligibility criteria, which typically include being a resident individual or a Hindu Undivided Family (HUF).
- Required Documents: Collect the necessary documents, including your identification proof, address proof, and PAN card details.
- Visit IDBI Bank: Approach your nearest branch and submit your application along with the required documents.
- Investment Amount: Determine the desired investment amount based on your financial goals and risk appetite.
- Complete Application: Fill out the application form accurately, providing all the necessary details, and submit it to the bank.
- Payment and Confirmation: Make the payment for the investment amount, as specified by the Bank, and obtain a confirmation receipt for future reference.
- Bond Issuance: On receipt of complete application form with Investment amount bonds will be issued.
Obligations of Investor/ Applicants
- Please complete the application in all respects.
- Incomplete applications are liable to result in delay of issue of the bonds (at the cost of the applicant).
- In case the application is submitted by a Power of Attorney (POA) holder, please submit original POA for verification, along with an attested copy for record.
- In case the application is on behalf of a minor, please submit the original birth certificate from the School or Municipal Authorities for verification, together with an attested copy for record.
- Please note that nomination facility is available to a Sole Holder or all the joint holders (investors) of the bonds.
- In case nominee is a minor, please indicate the date of birth of the minor and a guardian can be appointed.
- Nomination facility is not available in case the investment is in the name of a minor.
- Please notify the change of address to Receiving Office (branch) immediately.
- POST MATURITY INTEREST IS NOT PAYABLE ON THESE BONDS. The interest and redemption proceeds will be credited on the due date as per bank details registered.
- Indicate your date of birth / age.
- Provide your correct bank account details for receiving payment through electronic mode. In case of closure/transfer of the bank account, the fresh details may be immediately intimated to the Receiving Office to avoid any inconvenience.
- Any information regarding tax applicability may be provided to the bank/branch.
FAQs
The lock-in period for the bond is based on the age of investor as per below criteria
- Age upto 60 years: 7 years
- Age 60-70 years: 6 years
- Age 70-80 years: 5 years
- Age 80 years & above: 4 years
Yes, the interest earned on the Floating Rate Savings Bond 2020 is taxable as per the prevailing income tax laws.
No, NRIs are not eligible to invest in this bond.
No, there is no maximum investment limit for individual investors is usually.
Invest in the Floating Rate Savings Bond 2020 today and secure your financial future with a government-backed investment instrument that offers flexibility, potential returns, and stability.
Take advantage of the variable interest rate feature to protect your savings from inflation and benefit from changing market conditions.
Apply now and watch your savings grow!