RBI Floating Rate Savings Bonds: Want to buy offline? Know where to apply, documents, interest and tax rules

RBI Floating Rate Savings Bonds can appeal to investors looking for a government-backed fixed-income investment, but choosing the offline route means consumers need to know where to apply, what information to keep ready and how the investment will be recorded.

The process is straightforward in principle, but practical issues such as branch-level familiarity, payment realisation and taxation can affect the experience and the return an investor ultimately earns.

“Offline is not a workaround here. It is the original route, and for a large part of the buyer base for this bond, it is still the primary one,” said Anooj Mehta, partner at 1 Finance.

Adhil Shetty, CEO of BankBazaar, said consumers should ensure that they use an authorised receiving office and provide accurate KYC and bank details because these details are important for receiving interest and redemption proceeds.

RBI Floating Rate Savings Bonds can be purchased through authorised receiving offices, including specified banks and Stock Holding Corporation of India. Consumers opting for the offline route need to complete the prescribed application and provide the required KYC details.

Mehta said consumers should specifically ask for the application for Floating Rate Savings Bonds 2020 (Taxable). The prescribed application is Form B, rather than a bank's regular investment form. The investment amount is in multiples of ₹ 1,000.

Nomination is handled separately through Form C, Mehta said. Consumers should have the nominee's name, date of birth, address and relationship ready. If the nominee is a minor, details of the person appointed on the minor's behalf are also required.

Payment can be made through the modes permitted by the receiving office. RBI's guidelines provide for cash, cheque, demand draft or an electronic mode accepted by the receiving office. Cash payment is capped at ₹ 20,000.

One detail consumers should watch is the date on which the payment is realised. “Your date of issue is the date the cheque realises, not the date you handed over the form,” Mehta said.

This becomes particularly relevant around the six-monthly interest-rate reset. A cheque submitted before the end of June but realised in July could therefore have a different issue date than the investor expected. The issue date also determines when the seven-year maturity period ends.

Once processed, the investment is held electronically in a Bond Ledger Account, or BLA. The investor receives a Certificate of Holding as evidence of the investment.

Consumers do not necessarily need an existing savings account with the bank through which the bonds are purchased. Shetty said the important requirements are meeting the KYC requirements and providing valid bank details for receiving interest and redemption proceeds.

“The bond is held separately in a Bond Ledger Account, so you can invest even if you do not have an existing banking relationship with that bank,” Shetty said.

However, the practical experience can vary between receiving offices. Mehta said non-customers may face additional KYC requirements and, in some cases, may be asked to open an account or approach another branch.