RBI announces 7.69% rate of interest on Floating Rate Bond 2031

The Reserve Bank of India (RBI) on December 6 said the rate of interest on the Central government's Floating Rate Bond 2031 applicable for the half year December 7, 2022 to June 6, 2023 shall be 7.69 percent
per annum.

"It may be recalled that FRB, 2031 will carry a coupon, which will have a base rate equivalent to the average of the Weighted Average Yield (WAY) of last 3 auctions (from the rate fixing day i.e. December 7, 2022) of 182 Day T-Bills, plus a fixed spread of one percent. The Weighted average yields will be computed by reckoning 365 days in a year," the RBI said in a release.

Floating Rate Bonds are securities that do not have a fixed coupon rate. They have a variable coupon rate which is re-set at preannounced intervals.

The FRB bonds carry a coupon with a base rate equivalent to a weighted average yield of the last three auctions of 182-day Treasury Bills (T-Bill) plus a fixed spread decided by way of auction.