RBI hikes FRB 2034 interest rate to 7.26%: How much can you earn on Rs 5 lakh investment?

The Reserve Bank of India has announced a 0.81% increase in the interest rate on the Government of India Floating Rate Bond 2034 (FRB 2034). As per a statement from the RBI, the FRB 2034 interest rate for the half-year period, from October 30, 2026 to April 29, 2027, will be 7.26% per annum.

This is a significant increase from the 6.45% interest rate investors received on the FRB 2034 bond.

The FRB 2034 was launched in January 2022.


Also Read: RBI hikes FRB 2034 interest rate to 7.26%: How much can you earn on Rs 5 lakh investment?

FRB 2034 bond interest rates of last four years

Applicable period	FRB 2034 interest rate (p.a.)
October 30, 2026 – April 29, 2027	7.26%
April 30 – October 29, 2026	6.45%
October 30, 2025 – April 29, 2026	6.54%
April 30 – October 29, 2025	6.99%
October 30, 2024 – April 29, 2025	7.53%
April 30 – October 29, 2024	8.00%
October 30, 2023 – April 29, 2024	8.10%
April 30 – October 29, 2023	7.93%
October 30, 2022 – April 29, 2023	7.69%
April 30 – October 29, 2022	5.38%

Source: RBI

The RBI also said that the bond rate hike is because of the rise in the Weighted Average Yield (WAY) of 182-day T-Bills.

The WAY of 182- day T-Bills is calculated from the last three auctions (with the last being from the FRB 20234 rate fixing day, i.e., October 30, 2026). The government provides an additional 0.98% fixed spread over WAY.

“It may be recalled that FRB 2034 carries a coupon, which has a base rate equivalent to the average of the Weighted Average Yield (WAY) of the last three auctions (from the rate fixing day, i.e., October 30, 2026) of 182-day T-Bills, plus a fixed spread (0.98 per cent),” the RBI said in the statement dated October 29, 2026.

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The previous weekly auction for 182-day T-Bills was held on October 28, where the RBI declared a Weighted Average Price of Rs 96.8541 and a yield of 6.5140%.

Before that, the RBI declared a WAY of 6.2563% on October 14 and 6.0645% on October 7 for the 182 Day T-Bills.

Auction date of 182 Day T-Bills	Weighted Average Yield (WAY) of 182 Day T-Bills
October 28, 2026	6.5140%
October 14, 2026	6.2563%
October 7, 2026	6.0645%
Average of last three auctions	6.2783%

How FRB 2034’s interest rate reached 7.26%

The average of the last three 182 Day T-Bills auctions is 6.28%. If we add a fixed spread of 0.98% to it, the interest rate will be 7.26%.

What does a 7.26% interest rate mean for FRB 2034 investors?

Suppose someone had invested Rs 5 lakh in the FRB 2034 at an earlier rate of 6.45%; their six-monthly coupon amount would have been approximately Rs 16,125. At a 7.26% interest rate, they will get approximately Rs 18,150, an extra amount of Rs 2,025 over six months.

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However, the amount may change after the FRB 2034 rate revision in April 2027 since the interest rate on the bond is not fixed.

Here's an illustration of how a high coupon rate can help an investor with a Rs 5 lakh investment earn a higher amount for the current six-month cycle.

Particulars	Earlier FRB 2034 rate (6.45%)	New FRB 2034 rate (7.26%)
Investment amount	₹ 5,00,000	₹ 5,00,000
Annual coupon rate	6.45%	7.26%
Six-monthly coupon	₹ 16,125	₹ 18,150
Additional six-monthly income		₹ 2,025

What are RBI floating rate bonds?

Floating Rate Bonds (FRB) are securities that do not have a fixed coupon rate. Instead, they have a variable coupon rate that is reset at pre-announced intervals (say, every six months or one year).

The Floating Rate Bond can also carry a coupon, which will have a base rate plus a fixed spread, to be decided by way of an auction mechanism. The spread will be fixed throughout the tenure of the bond.