The Reserve Bank of India (RBI) has set the interest rate for the Government of India Floating Rate Bond 2028 (FRB 2028) at 6.45% per annum for the six-month period from October 4, 2026, to April 3, 2027. This announcement informs investors about the coupon rate applicable during this timeframe and explains how the floating rate bond works.
- The interest rate for FRB 2028 from October 4, 2026, to April 3, 2027, is 6.45% per annum.
- The bond's coupon resets every six months based on Treasury Bill yields.
- The coupon rate links to the weighted average yield of 182-day Treasury Bills plus a fixed spread of 0.64%.
- Interest payments are made to investors twice a year.
- The interest earned is taxable according to the investor's tax rules.
What is the Government of India Floating Rate Bond 2028?
The Government of India Floating Rate Bond 2028 is a debt security issued by the Indian government. Unlike fixed-rate bonds, its interest rate changes every six months based on market conditions. This floating rate feature helps protect investors from interest rate fluctuations over the bond’s tenure.
How is the interest rate for FRB 2028 determined?
The interest rate on FRB 2028 is linked to the weighted average yield (WAY) of the last three auctions of 182-day Treasury Bills (T-Bills). The RBI adds a fixed spread of 0.64 percentage points to this average yield to calculate the coupon rate for each six-month period.
For the period from October 4, 2026, to April 3, 2027, this calculation resulted in a coupon rate of 6.45% per annum.
What does the 6.45% interest rate mean for investors?
If an investor holds ₹1 lakh worth of FRB 2028 during this period, they would earn ₹6,450 in interest over a full year, assuming the rate remains unchanged. However, since the coupon resets every six months, the rate for future periods may be higher or lower depending on Treasury Bill yields at that time.
How often is interest paid on the bond?
Interest on the FRB 2028 is paid half-yearly. Investors receive payments twice a year based on the coupon rate set for each six-month period.
Are the interest earnings taxable?
Yes, the interest earned on the Government of India Floating Rate Bond 2028 is subject to taxation according to the investor's applicable tax laws.
Frequently Asked Questions
Q: Can the interest rate on FRB 2028 change during the bond’s tenure?
A: Yes, the interest rate resets every six months based on the weighted average yield of recent 182-day Treasury Bills plus a fixed spread, so it can vary over time.
Q: Is the 6.45% interest rate guaranteed for the entire bond period?
A: No, the 6.45% rate applies only for the six-month period from October 4, 2026, to April 3, 2027. Future rates will be determined by market conditions at the time of reset.
Q: How is the coupon rate calculated?
A: The coupon rate equals the weighted average yield of the last three 182-day Treasury Bill auctions plus a fixed spread of 0.64 percentage points.
Q: When will investors receive interest payments?
A: Interest payments are made twice a year, at the end of each six-month interest period.
