RBI to modify inflation-indexed bonds in wake of tepid response
10 Jan 2014 12:49 AM GMT
'We have got some feedback. We are in discussion with the government, so some clarification will come...on existing features some clarifications have been sought,' RBI deputy governor H R Khan said on the sidelines of an event organised by National Housing Bank here. Individual investment limits may be revised, he said.
'We will come with something. We had a meeting with bank chairmen this morning in Mumbai. All of them have committed. Issues of marketing, availability of forms, awareness campaign — all these things are happening and bank chairmen have committed to take it forward,' he said.
Demand for such bonds, which offer protection to retail investors from price rise, is now picking up, he said, adding that there is no immediate change in its features. Last month, the RBI extended the date for issuing inflation-indexed bonds to 31 March, 2014, from the earlier date of 31 December due to poor response.
The minimum investment is Rs 5,000 and the maximum is Rs 5 lakh per applicant per annum. Individuals, Hindu Undivided Family, charitable institutions and universities are eligible for subscription.
The interest on inflation-indexed bonds, which have a maturity of 10 years, is linked to the Consumer Price Index (CPI). The bond offers a fixed rate of 1.5 per cent per annum and a variable rate based on retail inflation. Interest will be compounded half-yearly and paid at maturity. The securities will be issued in the form of Bonds Ledger Account (BLA). Securities in the form of BLA will be issued and held with the RBI, which will act as the central depository. The distribution and sale of the bonds is through branches of the State Bank of India and its associate banks and all nationalised lenders. Investors can also approach three private sector banks — HDFC Bank, ICICI Bank and Axis Bank — and the Stock Holding Corporation of India.
The RBI, in consultation with the government, had announced the issue of the bonds on 29 November.
‘May defer Rs 50K-crore debt switch plan to FY15’
New Delhi: In order to maintain stability in debt market, the Reserve Bank of India (RBI) may postpone its Rs 50,000 crore debt-switch programme to next fiscal, RBI deputy governor H R Khan said.
‘Discussions are going on. It (debt switch not happening this year) is one possibility. There is probability that we may not do it. But who said we will not totally do it. This is one of the possibility that it may not happen this year but we are working on it,’ he said here.
Under the debt switch plan of Rs 50,000 crore stated in the Budget 2013-14, the government announced a plan to buy short-dated debt, and in turn sell longer-dated bonds. This is aimed at spreading out redemptions of debt to later years.
‘Whatever it is, we are working on it (debt switch) in a non-disruptive manner. If there are problems, then we may not do it (in fourth quarter of 2013-14 fiscal). But, it is very much on cards,’ Khan said on the sidelines of an event organised by National Housing Bank (NHB) here.
Asked if private placement is an option, he said, nothing is ruled out.
RBI governor Raghuram Rajan too had recently said that debt switches will be conducted in a non-disruptive manner.
Speaking at the NHB event, Minister of State for Finance Namo Narain Meena said housing as we all know is considered as the engine of growth for the economy particularly on account of its multiple linkages with the rest of economy.
‘Investments in housing are known to trigger growth impulses across the entire economy, which have significant impact on income, employment and gross domestic product (GDP,)’ Meena said.
Housing shortages coupled with urban poverty are serious constraints to inclusive growth and need attention, the minister said after releasing the 'Report on Trend and Progress of Housing in India'.
Urban growth across the world is projected to double from 3.3 billion in 2007 to 6.4 billion in 2050, he said, adding that much of this growth will take place in developing countries.
'We will come with something. We had a meeting with bank chairmen this morning in Mumbai. All of them have committed. Issues of marketing, availability of forms, awareness campaign — all these things are happening and bank chairmen have committed to take it forward,' he said.
Demand for such bonds, which offer protection to retail investors from price rise, is now picking up, he said, adding that there is no immediate change in its features. Last month, the RBI extended the date for issuing inflation-indexed bonds to 31 March, 2014, from the earlier date of 31 December due to poor response.
The minimum investment is Rs 5,000 and the maximum is Rs 5 lakh per applicant per annum. Individuals, Hindu Undivided Family, charitable institutions and universities are eligible for subscription.
The interest on inflation-indexed bonds, which have a maturity of 10 years, is linked to the Consumer Price Index (CPI). The bond offers a fixed rate of 1.5 per cent per annum and a variable rate based on retail inflation. Interest will be compounded half-yearly and paid at maturity. The securities will be issued in the form of Bonds Ledger Account (BLA). Securities in the form of BLA will be issued and held with the RBI, which will act as the central depository. The distribution and sale of the bonds is through branches of the State Bank of India and its associate banks and all nationalised lenders. Investors can also approach three private sector banks — HDFC Bank, ICICI Bank and Axis Bank — and the Stock Holding Corporation of India.
The RBI, in consultation with the government, had announced the issue of the bonds on 29 November.
‘May defer Rs 50K-crore debt switch plan to FY15’
New Delhi: In order to maintain stability in debt market, the Reserve Bank of India (RBI) may postpone its Rs 50,000 crore debt-switch programme to next fiscal, RBI deputy governor H R Khan said.
‘Discussions are going on. It (debt switch not happening this year) is one possibility. There is probability that we may not do it. But who said we will not totally do it. This is one of the possibility that it may not happen this year but we are working on it,’ he said here.
Under the debt switch plan of Rs 50,000 crore stated in the Budget 2013-14, the government announced a plan to buy short-dated debt, and in turn sell longer-dated bonds. This is aimed at spreading out redemptions of debt to later years.
‘Whatever it is, we are working on it (debt switch) in a non-disruptive manner. If there are problems, then we may not do it (in fourth quarter of 2013-14 fiscal). But, it is very much on cards,’ Khan said on the sidelines of an event organised by National Housing Bank (NHB) here.
Asked if private placement is an option, he said, nothing is ruled out.
RBI governor Raghuram Rajan too had recently said that debt switches will be conducted in a non-disruptive manner.
Speaking at the NHB event, Minister of State for Finance Namo Narain Meena said housing as we all know is considered as the engine of growth for the economy particularly on account of its multiple linkages with the rest of economy.
‘Investments in housing are known to trigger growth impulses across the entire economy, which have significant impact on income, employment and gross domestic product (GDP,)’ Meena said.
Housing shortages coupled with urban poverty are serious constraints to inclusive growth and need attention, the minister said after releasing the 'Report on Trend and Progress of Housing in India'.
Urban growth across the world is projected to double from 3.3 billion in 2007 to 6.4 billion in 2050, he said, adding that much of this growth will take place in developing countries.
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