Rate of Interest on Government of India Floating Rate Bond 2034
Distilled Policy Brief
- The rate of interest on Government of India Floating Rate Bond 2034 (FRB 2034) for the half year from October 30, 2026 to April 29, 2027 is set at 7.26 per cent per annum.
🎯 Prelims High-Yield Examination Points
Government of India Floating Rate Bonds (FRB) feature a coupon rate linked to the Weighted Average Yield of 182 Day Treasury Bills plus a fixed spread.
⚖️ Mains Analytical & Syllabus Linkages
Discuss the significance of floating rate bonds in government borrowing and debt management strategies within the Indian financial market.
🎯 UPSC Prelims Practice Drill
Consider the following statements regarding the Government of India Floating Rate Bond 2034 (FRB 2034): 1. The rate of interest on FRB 2034 is fixed for the entire duration of the bond without any periodic revisions. 2. The coupon on FRB 2034 consists of a base rate equivalent to the average of the Weighted Average Yield (WAY) of the last three auctions of 182-day Treasury Bills plus a fixed spread. Which of the statements given above is/are correct?
- [A] 1 only
- [B] 2 only
- [C] Both 1 and 2
- [D] Neither 1 nor 2
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is incorrect because the rate of interest on Floating Rate Bonds is variable and revised periodically (for instance, set at 7.26 per cent per annum for the half year from October 30, 2026 to April 29, 2027). Statement 2 is correct as the FRB 2034 carries a coupon whose base rate is determined by the average of the Weighted Average Yield of the last three auctions of 182-day T-Bills plus a fixed spread of 0.98 per cent.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.