According to reports from Upstox, RBI's Floating Rate Savings Bonds (FRSBs, 2020 (Taxable)) currently offer an interest rate of 8.05% for the January to June 2026 period. These bonds are among the highest interest-paying government-backed securities available in the market. The interest rate on these bonds is pegged to the interest rate on National Savings Certificates, as reported by Upstox. In the latest market context, FRSBs pay 8.05% p.a., reset every 6 months, tied to NSC rate + 0.35% spread, positioning them competitively against other government securities.
As reported by Upstox, for interest payment calculation ease, the month will be deemed to have 30 days, while for a year it will be assumed to have 360 days as against the otherwise 364 days. This simplified calculation method ensures consistent interest calculation across different bond tenures. On maturity, the interest for the broken period/last half-year shall be paid along with the principal, according to the report. The monthly compounding structure ensures regular interest accrual throughout the bond's life.
According to the latest announcement for interest rates on small savings schemes, the government has kept the interest rate on NSC unchanged at 7.7%, as reported by Upstox. This rate serves as the benchmark for determining the interest rate on RBI Floating Rate Savings Bonds, creating a direct correlation between these two government securities. The FRSBs are among the highest interest-paying government-backed securities, making them an attractive option for investors seeking guaranteed returns from government-backed instruments.
In the current market environment, FRSBs offer 8.05% p.a., which compares favorably with other government securities. T-Bills (91-day) yield approximately 6.4–6.5%, while State Development Loans (SDLs) yield 7.3–7.5% with a spread of 50–80 basis points above central G-Secs. The 10-year G-Sec benchmark yield is approximately 6.69–6.70% in early 2026, reflecting stable inflation at ~2% and an RBI repo rate of 5.25%. Tax-Free PSU Bonds (secondary market) offer coupon rates of 7.64–8.75% but trade at effective yields of 5.5–6.75%, making them valuable primarily for high-bracket investors seeking post-tax returns.
