RBI has announced the price of interest on Floating Rate Savings Bond, 2020 (Taxable) for the Period July 2021 – December 2021. The government had launched the Floating Rate Savings Bonds 2020 (Taxable) scheme from July 01, 2020. The coupon price for the 1st coupon period, payable on January 1, 2021 was fixed at 7.15 per cent. The coupon price on Floating Rate Savings Bond, 2020 (Taxable) for period July 1, 2021 to December 31, 2021 and payable on January 1, 2022 remains at 7.15 per cent, unchanged from the earlier half-year.
The coupon price or interest price is set at a positive spread of 35 basis points or .35 per cent more than the prevailing NSC price.
The price of interest on 5-year NSC continues to be 6.8 per cent till September 30, 2021. Earlier, the government had kept the post workplace smaller savings schemes interest prices unchanged for the July-August-September 2021 quarter from the earlier quarter.
The Floating Rate Savings Bonds 2020 will have a tenure of 7 years and the interest price will preserve varying throughout the tenure of the scheme. Interest will be paid half-yearly to the investors in July and January of every year. Only specified categories of senior citizens may well go for Premature redemption of the bonds.
The minimum investment quantity is Rs 1000, although there will be no maximum limit for investments made in the Bonds. The maximum investment in money can be made up to Rs 20,000.
One can invest via branches of State Bank of India, Nationalised Banks and 4 specified private sector banks.
As bank fixed deposit prices are falling, the Floating Rate Savings Bonds may well supply a much better avenue to savers specifically senior citizens. The returns are also above NSC but has a slightly longer tenure than NSC. In NSC, there are tax advantage below section 80 C but in the Floating bonds there is no such tax advantage. The interest earnings in each is totally taxable as per one’s tax slab. Therefore, one should really invest maintaining one’s tax slab and the tenure of the bonds into context as liquidity is much less in these bonds, getting non-transferable and not accessible for trading.