RBI announces interest rate on GOI Floating Rate Bond 2034

The Reserve Bank of India has notified the rate of interest on the Government of India Floating Rate Bond 2034 (FRB 2034). It said that for the half year beginning April 30, 2026, to October 29, 2026, the interest rate on the instrument carrying sovereign backing stands at 6.45% per annum.

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., April 30, 2026) of 182 Day T-Bills, plus a fixed spread (0.98 per cent), as per the RBI release.

Carrying sovereign backing, these are long-term instruments with variable interest rates adjusted to market conditions, deemed as safe for conservative investors.

1. Interest rate is every six months based on the average yield of the last three auctions of 182-day Treasury Bills (T-Bills).
2. Fixed spread: On the base rate, a fixed spread of 0.98% is added.
3. Interest payment frequency: Investors are entitled to get the interest rate every six months.
4. For buying the aforementioned instruments, investors can either tap the RBI Retail Direct portal or make a purchase via authorised banks.
5. Interest earned on these bonds is taxed as income from other sources and is taxed as per the investor’s applicable slab rate.
6. These bonds do not offer a high liquidity as bank FDs.
7. Rate adjustments as per interest rate: The rate on the instrument is influenced by the interest rate in the economy. So, in a rising interest rate scenario, the coupon rate goes higher, and vice versa.
8. Zero credit risk, as these are issued by the Government of India