RBI Announces Interest Rate of 8% on Floating Rate Savings Bond (FRSB) 2034

Current Context: The Reserve Bank of India (RBI) announced an 8% interest rate on the Floating Rate Savings Bond (FRSB) 2034 on 29th April 2024.

• This special type of bond issued by the Government of India matures in 2034.
• The interest rate is variable and will be reset every six months.
• The current rate, for the next six months (from April 30, 2024 to October 29, 2024), on this FRB bond will be 8%.
• The rate is calculated by taking an average of the interest rates from the previous three auctions of short-term government debt, plus a small additional fixed amount (0.98%).
• These bonds can be a good option for investors who want an interest rate that reflects current market conditions.
• FRBs have a maturity period of seven years.
• The minimum investment amount for FRBs is Rs 1,000, while there is no maximum limit.
• FRBs are backed by the government of India, making it one of the safest investments.
• Interest on these bonds is paid semi-annually on January 1 and July 1 each year, with no provision for cumulative interest payments.

Question:

Q.1 What is the maturity period of the Floating Rate Bonds (FRBs)?
a. Five years
b. Seven years
c. Ten years
d. Twelve years