RBI announces rate of interest on floating rate bond 2016

Rate of interest on FRB, 2016 was set at a mark-up (as decided in auction on May 6, 2004) over & above the variable base rate

The rate of interest on the Floating Rate Bonds, 2016 (FRB, 2016) applicable for the year (May 7, 2013 to May 6, 2014) shall be 7.62% per annum, said Reserve Bank of India (RBI) in a press release on Tuesday.

It may be recalled that the rate of interest on the FRB, 2016 was set at a mark-up (as decided in the auction held on May 6, 2004) over and above the variable base rate.

The variable base rate for payment of interest shall be the average rate (rounded off up to two decimal places) of the implicit yields at cut-off prices emerging in the three auctions of  364 day treasury bills immediately preceding the relative annual coupon reset date.

The variable base rate based on the average rate of the implicit yields at cut-off prices of the said last three auctions of 364 day treasury bills worked out to 7.58%.

The mark-up decided in the auction held on May 6, 2004 was (+) 0.04 (plus 0.04). The coupon rate has been fixed accordingly.