The Reserve Bank of India (RBI) has doubled the maximum limit for investment in inflation-indexed bonds to Rs10 lakh per annum for individuals. Further, the investment limit for institutions like Hindu undivided family (HUF), Charitable Trusts, Education Endowments and similar institutions that are not profit-seeking in nature has been increased from Rs 5 lakh to Rs 25 lakh per annum. The subscription for the inflation indexed national savings securities-cumulative will remain open till March 31.
The central bank has introduced Inflation Indexed bonds in December 2013 for retail investors with a view to provide a positive rate of return on their investment. Interest rate on these bonds is linked to Consumer Price Index (CPI).
Inflation-indexed bond is similar to any other government security. While, interest rate payable on these bonds comprise two parts include 1.5% fixed rate per annum and an inflation rate based on the final combined CPI compounded in the principal on a half-yearly basis and paid at the time of maturity. Final combined CPI with a lag of three months is used to calculate incremental inflation rate.
No comments:
Post a Comment