But the design should be user-friendly. They ought to be liquid, with interim cash flows, and the tenure should not be long.
The not-so-successful bonds have received a tepid response due to poor marketing and tax issues.
To incentivise distribution of the product, it has been decided to offer an additional incentive at the rate of 0.5 percent on the amount collected to agency banks (including Stock Holding Corporation of India) that garner subscriptions of Rs 100 crore or more by March 31, the central bank said.
In an interview to CNBC-TV18, personal finance expert, Hemant Rustagi, Wiseinvest Advisors spoke about inflation indexed bonds.
Interest at the rate of 1.44 per cent per annum will accrue on the indexed principal value of the bonds from the date of original issue and will be paid half yearly on December 5 & June 5, RBI said in a release.
Personalfn.com simplifies the reasons behind inflationary environment. It stresses on investing in the right places to beat the inflation and not letting it affect the investor's financial plan.
Spooked by the flight of overseas investments in Indian securities, the government started doling out bounties on primary bond dealers (PDs) whose commissions have zoomed manifold. This is aimed at building confidence while protecting them from any possible loss if yields rise after the bond auctions, sources told moneycontrol.com.
Tax and investment consultant Subhash Lakhotia simplifies the various advantages of inflation indexed bonds and how they will be helpful to small time retail investors from inflation.
The Reserve Bank of India (RBI) will conduct the second tranche of inflation indexed bonds (IIBs) auction for Rs 1,000 crore on June 25, 2013. These bonds of 10-year tenure (2023) will carry a real yield of 1.44 percent, according to a government notification.
Subir Gokarn of Brookings India said that there was no significant sign of any recovery even though the economy may have bottomed out. He added that gold import restrictions is only a short-term solution.
Inflation index bonds were fully subscribed in RBI's auction on Tuesday. The effective interest rate comes around 8 percent. Largest institutions and primary dealers participated in the auction.
The Reserve Bank of India (RBI) has put out details about how the scheme will work in practice, and the examples given are not particularly exciting.
The government will launch its first tranche of proposed inflation indexed bonds (IIBs) amounting to Rs 1,000 crore on June 4, 2013. Retail investors can buy them to tune of 20% of bond sales.
RBI may link the proposed inflation index bonds (IIBs) to CPI - inflation as and when it stabilizes but currently, those are linked to WPI - inflation, a senior official from the central bank said. Linking it to WPI, many believe, will not serve its basic purpose of IIBs.
RBI has issued 12-15,000 crore of Inflation indexed bonds that are linked to WPI. However, retail investors are more interested in CPI than WPI index and hence there is a fundamental disconnect. Read this space to know the opinion of financial expert Suresh Sadagopan on Inflation index bonds.
A retail investor should look for the eventual coupon rate and liquidity option while investing in inflation-indexed bonds, says certified financial planner, Gaurav Mashruwala.
IIBs are indexed to the Wholesale Price Index (WPI) which is geared to capture broader systemic inflation rather than the inflation that bites you and me.
Rajiv Anand, MD & CEO, Axis AMC feels inflation indexed bond is a good idea to attract retail investors.
The government is likely to issue the first set of the inflation-indexed bonds this month, government sources told Reuters on Thursday.
In an interview to CNBC-TV18 personal finance expert, Pankaj Mathpal of Optima Money Managers shared information about inflation-indexed bonds.
Union Budget 2013-2014 was the most eagerly awaited one considering it was the last budget for ruling party. Read this space to know what new reforms are announced and how the Budget has impacted your Fixed income investments.
The Reserve Bank is in talks with the Finance Ministry for launching inflation-indexed bonds, which can help reduce physical demand for gold, Deputy Governor H R Khan said here today.