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Government of India Floating Rate Bond 2028: Interest Rate Set at 6.17% for April–October 2026

The RBI has announced that the Government of India Floating Rate Bond 2028 (FRB 2028) will carry an interest rate of 6.17% per annum for the half-year period from April 4, 2026 to October 3, 2026. This rate is calculated using a formula based on the average Weighted Average Yield of the last three 182-day Treasury Bill auctions plus a fixed spread of 0.64%, making it an attractive option for NRI investors seeking inflation-linked returns on government securities.

Source: RBI — Press Releases — Thu, 02 Apr 2026 17:55:00

Official source

Government of India Floating Rate Bond 2028: Interest Rate Announcement for H1 2026–27

What Just Happened

On April 2, 2026, the Reserve Bank of India announced the coupon rate for the Government of India Floating Rate Bond 2028 (FRB 2028) for the first half of the financial year 2026–27. The rate has been set at 6.17% per annum, effective from April 4, 2026 through October 3, 2026.

How the Rate Gets Calculated

The FRB 2028 does not carry a fixed coupon. Instead, it uses a floating rate mechanism that resets every six months. Here's how it works:

Rate Formula:

  • Base Rate = Average of the Weighted Average Yield (WAY) from the last three auctions of 182-day Treasury Bills (T-Bills), measured from the rate-fixing day (April 4, 2026)
  • Fixed Spread = 0.64% (this never changes)
  • Coupon Rate = Base Rate + Fixed Spread
For this half-year, the base rate derived from recent T-Bill auctions, combined with the 0.64% spread, results in the 6.17% coupon.

Why This Matters for NRI Investors

Safety and Liquidity

FRB 2028 is a government security issued by the Government of India. It carries sovereign credit quality, making it one of the safest investment options available to NRIs. You can buy and sell these bonds on the secondary market through your Indian brokerage account or NRE/NRO account.

Floating Rate Advantage

Unlike fixed-rate government bonds, the FRB 2028 adjusts its coupon every six months based on prevailing T-Bill yields. This means:
  • If interest rates rise, your coupon will increase in the next half-year
  • If interest rates fall, your coupon will decrease
  • You are protected from being locked into a low rate if the RBI raises rates

Current Yield Context

At 6.17% per annum, this rate reflects the current monetary policy stance and short-term borrowing costs in the Indian financial system. NRIs comparing this with fixed-rate bonds or other debt instruments should note that floating rate bonds offer flexibility at the cost of coupon uncertainty.

Tax Treatment for NRIs

Interest income from government securities held by NRIs is taxable in India under the Income Tax Act. The interest is credited to your NRE or NRO account (depending on your account type) and is subject to TDS (Tax Deducted at Source) at the applicable rate. You can claim credit for this TDS when filing your Indian income tax return.

How to Invest

NRIs can purchase FRB 2028 through: 1. Primary auctions conducted by the RBI (if you have an account with a primary dealer or bank) 2. Secondary market via stock exchanges (NSE and BSE) through your brokerage account 3. Retail direct schemes if offered by the RBI for non-resident Indians

You will need an NRE or NRO account with an Indian bank and a demat account to hold these securities.

Key Dates to Remember

  • Rate Effective From: April 4, 2026
  • Rate Effective Until: October 3, 2026
  • Next Rate Reset: October 4, 2026 (the RBI will announce the new coupon for the second half of FY 2026–27)
  • Bond Maturity: 2028 (exact maturity date would be specified in the bond prospectus)

What Happens Next

Every six months, the RBI will announce a new coupon rate for FRB 2028 based on the average T-Bill yields of the preceding three auctions. This means your income stream will fluctuate, but you always know the rate at least six months in advance.

Bottom Line for NRIs

If you are looking for a safe, liquid, government-backed investment with a floating coupon that adjusts to market conditions, FRB 2028 at 6.17% for the next six months is worth considering. It offers better safety than corporate bonds and more flexibility than fixed-rate government securities. However, ensure you understand the tax implications and the floating rate mechanism before investing.

Always consult your tax advisor or a qualified financial planner in India to understand how this investment fits into your overall portfolio and tax situation.