Revamped inflation-indexed bonds soon to attract retail investors: RBI
13 Jun 2014 10:47 PM GMT
The Reserve Bank of India on Thursday said it is in discussion with the government to revamp inflation indexed bonds to attract more retail investors.
Inflation indexed bonds were introduced last year by the central bank but were not well received due to its complex structure.
‘We had launched inflation indexed bonds that were not successful. We are coming out with the revised version,’ RBI Deputy Governor H R Khan told reporters on the sidelines of an event here on Thursday.
He said that timing of the inflation indexed bonds launched last time was not possibly right and there were issues regarding understanding of the product and also related to interest pay out. ‘We have suggested few things to the government. One, in terms of increasing the spread and whether we can have non-cumulative option. They (government) are considering, let us see,’ Khan said. He said that the central bank is looking to offer quarterly interest pay out unlike last time when the payout was only on maturity.
Khan, however, did not give any timeline for the launch of the revise inflation indexed bonds. When asked whether there was any plan to increase foreign institutional investors' investment limit in the government bonds, the deputy governor said, ‘right now there is no such discussion’.
Khan said the central bank and the government are in the process of preparing framework for differentiated banking licence.
‘We have lot of internal discussion going on. We are also in dialogue with the government. We have some framework given by Nachiket Mor committee which are being discussed intensively within the RBI and with the government,’ he said.
Meanwhile, Khan also said that RBi will soon come out with a payment bank, as recommended by the Nachiket Mor committee.
‘We are also coming up shortly with what could be payment bank because there is huge potential for financial inclusion with focus on remittances by involving payment system product,’ Khan said.
Before coming out with the payment bank, the RBI will issue guidelines for it.Khan also said the central bank is in the process of issuing guidelines on universal commercial banking licences.
Inflation indexed bonds were introduced last year by the central bank but were not well received due to its complex structure.
‘We had launched inflation indexed bonds that were not successful. We are coming out with the revised version,’ RBI Deputy Governor H R Khan told reporters on the sidelines of an event here on Thursday.
He said that timing of the inflation indexed bonds launched last time was not possibly right and there were issues regarding understanding of the product and also related to interest pay out. ‘We have suggested few things to the government. One, in terms of increasing the spread and whether we can have non-cumulative option. They (government) are considering, let us see,’ Khan said. He said that the central bank is looking to offer quarterly interest pay out unlike last time when the payout was only on maturity.
Khan, however, did not give any timeline for the launch of the revise inflation indexed bonds. When asked whether there was any plan to increase foreign institutional investors' investment limit in the government bonds, the deputy governor said, ‘right now there is no such discussion’.
Khan said the central bank and the government are in the process of preparing framework for differentiated banking licence.
‘We have lot of internal discussion going on. We are also in dialogue with the government. We have some framework given by Nachiket Mor committee which are being discussed intensively within the RBI and with the government,’ he said.
Meanwhile, Khan also said that RBi will soon come out with a payment bank, as recommended by the Nachiket Mor committee.
‘We are also coming up shortly with what could be payment bank because there is huge potential for financial inclusion with focus on remittances by involving payment system product,’ Khan said.
Before coming out with the payment bank, the RBI will issue guidelines for it.Khan also said the central bank is in the process of issuing guidelines on universal commercial banking licences.
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