RBI Confirms FRSB 2020(T) Interest Rate Stability as Bond Coupon Settles at 8.05%
The Reserve Bank of India (RBI) has provided the interest rate for the Floating Rate Savings Bond, 2020 (Taxable) - FRSB 2020(T) covering the period from July 01, 2026, to December 31, 2026. The announcement reaffirms the current coupon rate set at 8.05% for this specific six-month cycle.The decision comes under the framework established by the Government of India Notification dated June 26, 2020, concerning these bonds. This notification stipulates that the bond's interest rate will be reset every half year.
FRSB Interest Rate and Calculation Details
For the period starting July 01, 2026, and concluding December 31, 2026, the coupon rate on FRSB 2020(T) remains fixed at 8.05%. This translates to a calculation of 7.70% plus a spread of 0.35%.The RBI communicated that this interest rate remains unchanged from the previous half-year payment period. The bond structure is designed to provide stability while incorporating market dynamics through its reset mechanism.
Understanding the Floating Rate Bond Mechanism
The coupon/interest rate on the FRSB 2020(T) follows a specific methodology governed by government regulations. This particular scheme ensures that bondholders are directly linked to the prevailing National Savings Certificate (NSC) rate.As stipulated, the interest rate is set at a spread of plus 35 basis points (bps) over the current NSC rate. The rate will be paid out semi-annually, beginning with January 01, 2027. This structured approach manages investor expectations regarding future income streams.
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