RBI Floating Rate Bond: A Secure Investment Option
Introduction:
At TapInvest.in, a leading fixed-income investment platform, we aim to offer our customers diversified fixed-income investment opportunities. Among various secure investment options available, the RBI Floating Rate Savings Bond stands out as a reliable, government-backed financial instrument. While we may not offer this particular bond on TapInvest, understanding it can help you make informed decisions when exploring similar investment options on our platform.
In this guide, we’ll cover everything you need to know about the RBI Floating-Rate Bond, including its definition, key features, how to buy it, and potential for portfolio diversification. We will also explore the differences and the bond’s interest rate history.
What Is an RBI Floating Rate Bond?
The RBI Floating Rate Bond is a government-issued bond designed to provide investors with steady income through variable interest rates. These bonds are considered low-risk backed by the Indian government, making them highly secure for investors looking to diversify their portfolios with fixed-income securities.
What makes the RBI Floating Rate Bond unique is its variable interest rate, which adjusts every six months based on the prevailing interest rates in the market. This adjustment ensures investors remain protected against interest rate volatility, providing an advantage over traditional fixed-rate bonds.
Key Features of RBI Floating Rate Bond:
- Floating Interest Rate: The bond’s interest rate is not fixed but linked to the interest rate on National Savings Certificates (NSC). The rate is reset every six months, providing flexibility to investors.
- Government Backing: Since the bond is issued by the Reserve Bank of India (RBI), it is considered one of the safest investment options in the market.
- Interest Payment: Interest is paid semi-annually and is taxable per the investor’s income tax slab.
- Tenure: The bond has a lock-in period of 7 years, ensuring long-term security.
- Minimum Investment: The minimum investment starts from INR 1,000, making it accessible to many investors.
- No Premature Withdrawal: Premature withdrawal is not allowed, except for senior citizens, making it suitable for investors with long-term goals.
Also Read: https://tapinvest.in/blog/rbi-bonds
Floating Rate Savings Bonds vs. Fixed-Rate Bonds:
Floating-rate savings bonds provide interest payments based on the prevailing market interest rates. In contrast, traditional fixed-rate bonds offer a predetermined interest rate throughout the bond’s tenure. The primary advantage of floating-rate bonds is that they protect investors from adverse inflation and interest rate movements, unlike fixed-rate bonds, where returns remain stagnant even if interest rates rise.
By holding RBI floating rate bonds, investors can hedge against inflation risks and benefit from rising interest rates. This makes them an excellent option for diversifying their portfolios with low-risk instruments while still participating in potential market gains.
RBI Floating Rate Bond Interest Rate History:
The interest rate on the RBI Floating Rate Bond is reviewed every six months. It has historically ranged between 7% and 8% per annum, depending on the reference interest rate. For example, in recent years, the interest rate on these bonds has been around 7.15% to 7.75%, which is 0.35% higher than the NSC rate.
How to Buy RBI Floating Rate Bonds?
While Tap Invest offers various fixed-income investment options, you can purchase RBI Floating Rate Bonds through authorised banks like HDFC Bank and Axis Bank. The process is straightforward:
- Eligibility: Any Indian resident is eligible to invest in these bonds.
- Application: Visit any authorised bank or use online banking services to apply for the bond.
- Payment: You can purchase the bond with a minimum investment of INR 1,000 and in multiples after that.
Why Choose RBI Floating Rate Bonds?
Investing in RBI floating rate bonds offers several benefits:
- Inflation Protection: The bond’s interest rates adjust to market conditions, protecting your investment from inflationary erosion.
- Low Risk: Being a government-backed instrument, the risk of default is shallow, making it an ideal choice for conservative investors.
- Stable Income: With semi-annual interest payments, investors enjoy a steady income stream, ensuring financial predictability.
- Long-Term Security: The bond’s seven-year maturity period aligns well with long-term financial planning goals, especially for retirees or those planning for future expenses like education or home purchases.
Why Consider Tap Invest for Fixed-Income Investments?
While the RBI Floating Rate Bond is a secure option, TapInvest. Offers a range of similar fixed-income investment opportunities tailored to help you achieve better returns. Our platform is designed to provide diversified bond investment options that cater to your financial goals. By signing up on Tap Invest, you gain access to:
At TapInvest, we aim to make fixed-income investing simple and accessible for all. Whether new to investing or an experienced investor, our platform offers options that help you diversify your portfolio while ensuring steady returns.
Also Read: https://tapinvest.in/blog/senior-secured-bonds-india.
Conclusion:
The RBI Floating Rate Bond remains one of the most secure investment options for those looking to safeguard their portfolios against inflation and interest rate fluctuations. With its government backing and floating interest rates, this bond is a low-risk, long-term investment suitable for conservative investors.
However, if you’re looking for similar fixed-income investments with potentially higher returns, consider exploring the offerings on Tap Invest by signing up today, you can access various bond investment options, ensuring your financial future remains secure and prosperous. To know more and get updates, please follow us on Instagram.
FAQ On RBI Floating Rate Bond:
1. What is an RBI Floating Rate Bond?
An RBI Floating Rate Bond is a government-backed bond with variable interest rates that adjust every six months based on market conditions.
2. How does the floating rate on RBI bonds work?
The floating rate is tied to the interest rate of National Savings Certificates (NSC) and is adjusted every six months.
3. Can I buy RBI Floating Rate Bonds on TapInvest?
While TapInvest doesn’t offer RBI Floating-Rate Bonds, we provide various secure fixed-income investment options, such as bond and invoice discounting.
4. How to buy RBI Floating Rate Bonds?
You can buy RBI floating rate bonds through authorised banks like HDFC Bank Axis Bank or online banking services.
5. What are the benefits of investing in RBI Floating Rate Bonds?
The primary benefits include inflation protection, stable income, and low-risk, long-term security backed by the government.
