The rate of interest on the Floating Rate Bonds, 2016 (FRB, 2016) applicable for the year (May 7, 2014 to May 6, 2015) shall be 8.98 per cent per annum.

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 Government of India 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 Government of India 364 day Treasury Bills worked out to 8.94 per cent. 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.

Ajit Prasad

Assistant General Manager

Floating rate bond interest fixed by variable base rate plus auction mark-up, determining the bond's annual coupon. The annual coupon for Floating Rate Bonds, 2016 is determined by applying the auction mark-up to the variable base rate, defined as the average of implicit yields at cut-off prices from the three most recent Government of India 364-day Treasury Bill auctions prior to the coupon reset date. For the relevant reset the average base rate was 8.94 per cent and the auction mark-up was +0.04, resulting in a coupon of 8.98 per cent per annum for May 7, 2014 to May 6, 2015.