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Floating Rate Savings Bonds 2020 (Taxable)


The Ministry of Finance (Department of Economic Affairs) has issued vide notification F.No.4(10)-B(W&M)/2020 dated June 26, 2020, New Delhi. The Government has announced to launch 7 years Floating Rate Savings Bonds, 2020 (Taxable) -FRSB 2020 (T) scheme w.e.f. July 1, 2020.

Eligibility- The Bonds may be held by-
  • A person resident in Indiain her or his individual capacity, or
    1. in individual capacity on joint basis, or
    2. in individual capacity on any one or survivor basis, or
    3. on behalf of a minor as father/mother/legal guardian
  • An HUF (Hindu Undivided Family)
  • A Non-Resident Indian (NRI) is not eligible to apply for such bonds. If a person who subsequently becomes NRI, then redemption proceeds of such investments along with interest can be repatriated as per FEMA.
Amount of Investment-

The minimum amount shall be Rs. 1,000/- and there is no upper limit of investment.  The amount of investment shall be in multiple of Rs. 1000/-.

Tax Treatment-

Interest received on bonds will be taxable under the Income-tax Act, 1961 (applicable according to the income tax slabs applicable to bond holder/s.


Subscription shall be made in the form of cash (up to ₹20,000/- only)/drafts/cheques or any electronic mode acceptable to the Receiving Office.


Application for the bonds may be made either physically or electronic form in ‘Form B’ mentioning the name, amount and full address.


The Bonds held to the credit of Bond Ledger Account (BLA) of an investor shall not be transferable, except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds

Lock in period-

Maturity period is 7 years from the date of issue.

Premature withdrawal-

It shall be allowed for individual investors in the age group of 60 years and above, subject to submission of document relating to date of birth of the investor in support of age to the satisfaction of the issuing bank, after minimum lock in period from the date of issue as indicated below:-

  • Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.
  • Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.
  • Lock in period for investors in the age of 80 years and above shall be 4 years from the date of issue.
Joint Bond holders-

In case of joint holders or more than two holders of Bonds, any one of the holders shall fulfill the above conditions of eligibility.

Date of Issue-

The Bonds will be issued, in electronic form and credited to the Bond Ledger Account (BLA) of the investor/s on the date of the tender of cash or the date of realization of draft/cheque/funds.

  • The Bonds will be issued only in the electronic form and held at the credit of the holder in an account called Bond Ledger Account (BLA), opened with the Receiving Office.
  • The Bonds issued to the credit of BLA of an investor will be held by any number of branches of the Receiving Offices, as authorised by Reserve Bank of India, as specified in paragraph 10 below.
  • A certificate of holding as specified in Annexure 1 will be issued to the holder/s of Bonds in Form ‘A’ as a proof of subscription.
Receiving Offices-

Applications for the Bonds will be received at any number of branches of State Bank of India, Nationalised Banks and four private sector banks, list as specified below-

S. No.

Name of Bank


State Bank of India


Bank of Baroda (Including Vijaya Bank and Dena Bank)


Bank of India


Bank of Maharashtra


Canara Bank (Including Syndicate Bank)


Central Bank of India


Indian Bank (Including Allahabad Bank)


Indian Overseas Bank


Punjab National Bank (including Oriental Bank of Commerce and United Bank of India)


Punjab & Sind Bank


Union Bank of India (including Andhra Bank and Corporation Bank)


UCO Bank


HDFC Bank Ltd.


ICICI Bank Ltd.


IDBI Bank Ltd.


Axis Bank Ltd.


Nomination and its cancellation shall be made in Form ‘C’ and Form ‘D’ respectively, 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.

  • A sole holder or all the joint holders (investors) of a Bond, being individual/s, may nominate in Form ‘C’ one or more persons who in the event of death of the sole holder/all the joint holders, as the case may be, would be entitled to the Bonds and to the payment due thereon.
  • Where the nomination has been made in favor of two or more nominees and either or any of them dies before such payment becomes due, the title to the Bonds shall vest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly.
  • In the event of the nominee or nominees predeceasing the holder(s), any nomination made as above shall become void. The holder(s) may make a fresh nomination.
  • The investor(s) can make separate nomination for each investment.
  • No nomination shall be made in respect of the Bonds issued in the name of a minor.
  • A nomination made by a holder of Bond/s may be varied by a fresh nomination, or as near there to as may be, or may be cancelled by giving notice in writing to the Receiving Office in Form D.
  • Every nomination and every cancellation or variation shall be registered at the Receiving Office where the Bond is issued and shall be effective from the date of such registration.
  • Where the nominee is a minor, the sole holder or the joint holders, as the case may be, may appoint in a prescribed manner any person, in whom the bond would be deemed to have vested in the event of death of such holder or joint holders during minority of the nominee.
Interest (Floating):
  • The interest on the bonds will be payable at half yearly intervals from the date of issue. The first interest payment will be released on January 1st, 2021 and thereafter every July 1st and January 1st.       
  • The coupon/interest rate of the bond is linked/pegged with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate.
  • The coupon rate for first coupon period i.e. July 1 to Dec. 31, 2020, payable on Jan. 01, 2021 at 7.15% (6.80%+0.35%= 7.15%). All subsequent coupon reset would be based on the fixation of rate of interest on NSC on Jan 01 and July 01 following the above methodology.
  • Interest on Bonds held to the credit of Bond Ledger Account of an investor will be paid, electronically by credit to the bank account of the holder as per details provided by the applicant.
Tax Deduction at Source (TDS)
  • Tax will be deducted at source while making payment of interest on the Bonds from time to time and credited to Government Account.
  • Provided that tax will not be deducted while making payment of interest/maturity proceeds as the case may be, to individual/s who have made a declaration in the application form that they have obtained exemption from tax under the relevant provisions of the Income Tax Act, 1961 as amended from time to time and have submitted a true copy of the certificate obtained from Income Tax Authorities.
Advances/Tradability against Bonds

The Bonds shall not be tradable in the secondary market and shall not be eligible as collateral for availing loans from banks, financial Institutions and Non-Banking Financial Companies.


Brokerage at the rate of 0.5% of the amount mobilized will be paid to the Receiving Offices and they shall share at least 50% of the brokerage so received with brokers/sub brokers registered with them, on the applications tendered by them and bearing their stamp, on behalf of their clients.



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