Thursday, November 15, 2012

RBI TO INTRODUCE INFLATION-INDEXED BONDS SOON

To protect the returns of investors from the vagaries of inflation, The Reserve Bank of India
(RBI) plans to introduce inflation-indexed bonds (IIBs). The principal on the IIBs will be indexed to
inflation and the coupon will be calculated on the indexed principal. H.R. Khan, Deputy Governor, Reserve Bank of India (RBI) explained that the capital (principal) will be adjusted (to inflation) and investors will earn interest on the enhanced capital based on the reference rate. He also said that IIBs is being discussed between the joint group of the RBI and the Government It will be notified soon.

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