Banks have continuously increased their F interest rates and many banks are now giving more than 8% returns. Meanwhile, the Reserve Bank of India ie RBI has also increased the interest rates of its floating bonds.
This interest is more than the FD of any other government bank. However, the new interest rate has been extended only for 6 months and after September 21, 2023, RBI will review it again. Till then the customers will get 8.51 percent annual interest and their money will also be completely safe under the guarantee of the government.
RBI said in its statement, ‘It should be remembered that FRB, 2033 will have a coupon whose base rate will be the same as that of the last 3 auctions (from the rate fixing day, i.e., March 22) of 182 Day T-Bills. 2023) will be equal to the weighted average yield (WAY). The weighted average yield will be calculated by counting 365 days in a year.
What is floating rate bond?
Nowadays floating rate bonds are in great discussion. Ever since the government has issued floating rate bonds (Floating Rate Savings Bonds, 2020-Taxable) in lieu of RBI bonds, there has been a lot of discussion since then. Let us tell you that floating rate bonds are those securities on which there is no fixed coupon rate or interest rate. It has several coupon rates, not just one, which are reset each time within a predetermined time frame.
How is it different from regular bonds?
In a regular bond, you get interest at a fixed rate. This interest rate of the bond is called Coupon. Often a bond is issued along with this coupon. This means that the investor knows in advance how much interest he is going to get on the bond. However, the rate of interest in floating rate bonds is not fixed. This interest rate keeps on changing from time to time.
