Small investors to get inflation-linked savings scheme soon

Posted By: Staff
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Small investors to get inflation-linked savings scheme soon
Mumbai, Oct 29 (PTI) The Reserve Bank of India plans to soon launch a 10-year savings instrument that will offer inflation-linked returns to small investors as an alternative to investing in gold.

"It is proposed to launch Inflation Indexed National Saving Securities (IINSSs) for retail investors in November/December 2013 in consultation with the government," the RBI said today in its Second Quarter Review of Monetary Policy 2013-14. The inflation-indexed securities for retail investors will be linked to the new (combined) consumer price index (CPI). The interest on these securities would comprise of a fixed rate plus inflation.

"Interest would be compounded half-yearly and paid cumulatively at redemption. These securities will be distributed through banks to reach out to the masses," the RBI said. Eligible investors would consist of individuals, Hindu undivided families, trusts and charitable institutions. The Union Budget for 2013-14 had proposed introducing instruments that would protect savings from inflation and provide an alternative to gold as an investment avenue for individuals. Both the government and the RBI have imposed a host of restrictions on the import of gold, one of the major reasons for the record high current account deficit in the previous financial year. In another decision, the RBI allowed banks to pay interest on savings and term deposits at shorter-than-quarterly intervals. Banks are currently required to pay interest on such deposits at quarterly or longer intervals. PTI

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