The Reserve Bank of India has authorised major public sector and private sector banks to issue RBI Floating Rate Savings Bonds, but only certain designated branches of these banks can accept physical application forms. According to reports from Personal Finance News, some of the designated public sector banks include SBI, PNB, Bank of India, Bank of Baroda and UCO Bank. Designated private sector banks include Axis Bank, ICICI Bank, HDFC Bank and IDBI Bank. Investors can also approach Stock Holding Corporation of India, which is authorised to accept applications for these bonds. As per Mint, consumers can purchase these bonds through authorised receiving offices, including specified banks and Stock Holding Corporation of India.
For offline applications, investors do not necessarily need to have a bank account with the bank through which they apply for the bonds. According to Mint, the prescribed application is Form B rather than a bank's regular investment form, and the investment amount is in multiples of ₹1,000. Along with the duly filled-in physical application form, investors must submit basic KYC documents, including identity proof, address proof and a copy of their PAN card, which is mandatory. Additionally, investors need to provide details of the bank account into which the interest and redemption proceeds will be credited. Mint recommends carrying Aadhaar or another officially valid address document, a recent photograph and a cancelled cheque for the account into which interest is to be credited. Consumers should also have nominee details ready, including the nominee's name, date of birth, address and relationship, with additional requirements for minors and guardians.
According to Mint, payment can be made through cash, cheque, demand draft or electronic mode accepted by the receiving office, with cash payment capped at ₹20,000. However, cash payments exceeding ₹20,000 at one time are not accepted for these bonds. The payment realisation date is crucial - as noted by Mint, your date of issue is the date the cheque realises, not the date you handed over the form. This becomes particularly relevant around the six-monthly interest-rate reset, as a cheque submitted before the end of June but realised in July could have a different issue date than expected. Once processed, the investment is held electronically in a Bond Ledger Account (BLA) and the investor receives a Certificate of Holding as evidence of the investment.
Interest from Floating Rate Savings Bonds is fully taxable at the applicable tax rate, with TDS applying when interest crosses ₹10,000 in a financial year, at 10% where PAN is available and higher rates where it is not. As per Mint, the interest does not qualify for a Section 80C deduction and TDS applies under prevailing tax rules. Using an illustrative 8.05% coupon, Mint estimates that an investor with no tax liability would retain the full 8.05%, while the return would be roughly 6.4% for an investor in the 20% tax band and around 5.5% for someone in the highest slab. Investors whose income is below the applicable taxable limit can submit relevant declarations to avoid TDS, subject to applicable conditions. Senior citizens should be careful about assuming that higher TDS thresholds available for certain bank and post-office deposits apply to these bonds.
