RBI floating rate bond at 8.05%: Has the rate changed or is it still one of the best fixed income picks?

The Reserve Bank of India (RBI) floating rate bond rate will remain unchanged at 8.05% as the Finance Ministry kept the National Savings Certificate (NSC) interest rate unchanged at 7.7% at its quarterly small savings scheme interest rate review meeting today (Monday, March 30, 2026).

The RBI floating rate bond is determined by pegging it at a 0.35% premium over the NSC rate.

"The rates of interest on various Small Savings Schemes for the first quarter of FY 2026-27, starting from April 1, 2026, and ending on June 30, 2026, shall remain unchanged from those notified for the fourth quarter (January 1, 2026 to March 31, 2026) of FY 2025-26," the Finance Ministry said in a notification on Monday.



Also Read: Have the interest rates on PPF, NSC, SCSS and other small savings schemes changed for the April-June 2026 quarter?

At 8.05% and despite a falling repo rate scenario, the RBI floating rate bond remains one of the safest investment options for a lot of investors with a low-risk appetite.

The RBI bond comes with a 7-year maturity period, sovereign guarantee and has no upper investment limit. Thus, it remains a better investment option compared to fixed deposit (FD) interest rates provided by many public sector undertaking (PSU) and private sector banks.

Not many fixed interest rate investments offer 8% rate

Though the RBI bond rate is not fixed, an 8.05% return makes it one of the options where investors can get over 8% return on their investments.

Among small savings schemes, only Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Account (SSA) offer a better interest rate at 8.2% for both.

RBI floating rate bond vs bank FD rates

The RBI bond is offering a higher interest rate compared to 5-year and 10-year FDs of most banks, including public and private banks, as per data from Paisabazaar.com.

Highest 5-year FD interest rates (PSU banks)

Bank	Interest Rate
Bank of Baroda	6.30%
Canara Bank	6.25%
Punjab National Bank	6.10%
Indian Overseas Bank	6.10%
State Bank of India	6.05%

Highest 10-year FD interest rates (PSU banks)

Bank	Interest Rate
Canara Bank	6.25%
Indian Overseas Bank	6.10%
State Bank of India	6.05%
Central Bank of India	6.00%
Union Bank of India	6.00%

Highest 5-year FD interest rates (private banks)

Bank	Interest Rate
DCB Bank	7.15%
IDFC FIRST Bank	7.00%
SBM Bank India	7.00%
YES Bank	6.75%
RBL Bank	6.70%

Highest 10-year FD interest rates (private banks)

Bank	Interest Rate
DCB Bank	7.00%
SBM Bank India	7.00%
YES Bank	6.75%
RBL Bank	6.70%
ICICI Bank	6.50%

Why is RBI floating rate bond still one of best fixed income investments?

Harsimran Sahni, head of treasury, Anand Rathi Global Finance, told ET Wealth Online that floating rate bonds can be considered a promising investment option when the RBI is considering rate hikes or when a portfolio is to be protected against hiking cycles.

“Their variable coupon structure allows returns to adjust in line with prevailing rate cycles, thereby mitigating duration risk typically associated with traditional fixed-rate instruments. Consequently, these bonds tend to outperform conventional fixed-income products during periods of monetary tightening,” says Sahni.

Vinayak Magotra, product head & founding team, Centricity WealthTech, told ET Wealth Online RBI that Floating Rate Savings Bonds is an attractive fixed income investment option because it combines sovereign safety with protection against rising interest rates.

According to Sahni, from an investment standpoint, there is no prescribed upper investment cap, making them accessible across a broad investor base.

Sahni says from a regulatory and taxation standpoint, these bonds do not offer any specific tax advantages, with interest income taxed at the investor’s marginal rate.

How is RBI floating rate bond rate determined?

Magotra explains that the interest rate is transparently determined by pegging it at a 0.35% premium over the NSC rate, with reviews conducted semi-annually.

Sahni says the rate is derived from the weighted average yield of recent government securities auctions, which is calculated based on the three auctions of 182 days T-Bills and the market spread of auction cycles over a defined period.

This methodology ensures that the bond’s return profile remains aligned with current market interest rates, says Sahni.

Chartered accountant, Foram Naik Sheth, KMP, Wealth Management Solutions, NPV Associates LLP, says when broader market and government savings yields rise, RBI bond’s returns adjust upward automatically.

Can RBI floating rate bond be made part of investment strategy, including retirement planning?

Sahni suggests RBI bonds are best treated as tactical allocations rather than core portfolio holdings.

“They may not warrant a permanent allocation within long-term strategies, including retirement planning, given their cyclical suitability. As such, investors and portfolio managers may choose to deploy capital into these instruments opportunistically, rather than incorporating them as a structural component of long-term asset allocation models,” advises Sahni.

Magotra says within an asset allocation framework, these bonds are best positioned as the ‘core’ hold-to-maturity debt component.

“For retirement strategies, they are incredibly valuable, the reliable half-yearly interest payouts provide retirees with a predictable cash flow that is entirely insulated from equity market volatility,” says Magotra.

Mukesh Pandey, director of Rupyaa Paisa, says investors who have excess cash or, who are soon to reach their long-term goals should consider moving a portion of their fixed income investment into the RBI bonds to secure a higher real return compared to the usual FDs.