Inflation Indexed Bonds to be issued till March 31, 2014
Inflation Indexed Bonds to be issued till March 31, 2014Mumbai, Dec 31 (KNN) The Reserve Bank of India (RBI) has extended the time for issuance of bonds linked to the consumer price inflation till March 31, 2014, instead of its earlier issuance closure of 31 December, 2013.
"On review, now it has been decided to extend the issuance of Inflation Indexed National Saving Securities-Cumulative till March 31, 2014. The issuance can be closed earlier than March 31, 2014 with a prior notice," RBI said in a release.
However, “the issuance can be closed earlier than March 31, 2014 with a prior notice,” RBI said in a notification. The issue opened on 23 December and are available with the banks for purchase.
RBI has launched the Inflation Indexed National Saving Securities-Cumulative (IINSS-C) to protect small investors against inflation which has been eating into their real savings.
The minimum limit for investment is Rs 5,000 and the maximum limit is Rs 5 lakh per applicant per annum.
Individuals, Hindu Undivided Family, charitable institutions and universities are eligible for subscription.
Interest rate would be linked to Consumer Price Index (CPI). Rate would comprise two parts -- fixed rate (1.5 per cent per annum) and inflation rate based on CPI. The same will be compounded in the principal on half-yearly basis and paid at the time of maturity. Since it is the CPI inflation that impacts the people significantly, this offers a better hedge against inflation.
Early redemptions, to be allowed only on coupon dates, will be allowed after one year from date of issue for senior citizens (65 years and above of age) and 3 years for all others, subject to penalty charges at the rate of 50 per cent of the last coupon payable for early redemption.
These securities will be issued in the form of Bonds Ledger Account (BLA). The securities in the form of BLA will be issued and held with RBI and thus RBI will act as central depository.
As distribution or sale of bonds would be through banks, the Ministry said investors may approach branches of State Bank of India and its associate banks and all nationalised banks.
Eligible investors can also buy bonds from three private sector banks -- HDFC Bank, ICICI Bank and Axis Bank -- and Stock Holding Corporation of India.
These bonds are launched as instruments that will protect savings from inflation, especially the savings of the poor and middle classes. (KNN Bureau)