Reserve Bank of India to introduce inflation-indexed bonds soon

Reserve Bank of India (RBI) to introduce Inflation-Indexed Bonds (IIB) soon

The Reserve Bank of India (RBI) plans to introduce Inflation-Indexed Bonds (IIBs) to protect the returns of investors from the vagaries of inflation.

The principal on the IIBs will be indexed to inflation and the coupon will be calculated on the indexed principal.

Deputy Governor of RBI, Mr H.R. Khan explained that the capital (principal) will be adjusted (to inflation) and investors will earn interest on the enhanced capital based on the reference rate.

“This (IIBs) is being discussed between the joint group of the RBI and the Government. It will be notified soon,” said Khan at a capital markets summit organised by FICCI.

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