RBI Announces Interest Rate on Government of India Floating Rate Bond 2031

The Reserve Bank of India (RBI) has fixed the coupon (interest rate) on the Government of India Floating Rate Bond 2031 (FRB 2031) at 6.52 per cent per annum for the six-month period starting from December 7, 2025, to June 6, 2026. This revised rate will apply to all outstanding FRB 2031 holdings during this period.

What is FRB 2031?

Floating rate bonds are government securities that do not carry a fixed interest rate. Instead, the coupon adjusts at regular intervals based on market conditions. FRB 2031 is one such bond issued by the Government of India. Its coupon is revised every six months according to a formula set by the RBI. This makes it different from fixed-rate bonds, which pay the same interest throughout their life.

Difference Between Floating Rate Bonds and Fixed Rate Bonds

Floating Rate Bonds (FRBs):

The coupon changes every few months.
Protect investors when interest rates rise.
Transparent formula based on the RBI framework.

Fixed Rate Bonds:

The coupon remains the same until maturity.
Do not adjust to inflation or rising rates.

Next Coupon

The next coupon for FRB 2031 will be decided on June 7, 2026. The formula will be applied again, using the average yield of the last three 182-day T-bill auctions plus the fixed spread of 1 per cent. By linking the coupon to Treasury Bill yields, FRB 2031 ensures that investors earn competitive returns even when interest rates change.This protects them from being locked into lower rates and makes floating-rate bonds an attractive option compared to fixed-rate securities.

How To Invest

In order to invest in the Government of India Floating Rate Bond 2031, individual investors need to either open a free account called the Retail Direct Gilt (RDG) account in the RBI's Retail Direct portal, where payments can be made through net banking or UPI, or visit branches of State Bank of India, ICICI Bank, and HDFC Bank that are authorised to sell these bonds. Investors can also use the banks' online investment services. The bonds can also be kept in demat form through brokers' portals. After receiving them, these bonds will appear in a regular securities portfolio alongside shares and mutual funds.

The lowest investment is usually 1000 rupees, and there is no upper limit. This means that both small investors and big institutions can invest. These bonds are backed by the Government of India, which means they carry a sovereign guarantee and are considered among the safest investment options. If investors need funds before maturity, they can sell the bonds in the secondary market.

In short, anyone interested in FRB 2031 can invest either online through the RBI Retail Direct portal, through authorised banks, or via a demat account with a broker. The process is simple, the entry amount is low, and the investment is secure, with interest rates that reset every six months to reflect market conditions.

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