Greater Noida: The Reserve Bank on Saturday said it is likely to launch within a month the inflation-indexed bonds (IIBs), which will help investors including retail to hedge their savings against inflation.
"Probably in a month’s time (IIB). We are in the advanced stages of discussion with the government," RBI Deputy Governor H R Khan said on the sidelines of an event organised by CII at the ADB annual meet.
He said that retail participation will be allowed right from the start. However, the quantum of retail portion is being decided.
"There is something called a non-competitive bidding quota which is 5 percent, which doesn’t get filled up, we are thinking of increasing this...Right now it is 5 percent, we are thinking of 10 percent but we need to finalise this," he said.
As of now it will be linked to Wholesale Price Index, Khan said. The central bank, for some time, has been planning to introduce IIBs to wean away investors from gold as a hedge against inflation.
Finance Minister P Chidambaram in the Budget speech had said: "I propose to introduce instruments that will protect savings from inflation, especially the savings of the poor and middle classes. These could be Inflation Indexed Bonds or Inflation Indexed National Security Certificates."
On clarifications regarding new banking licence, he said, "They are now processing those clarifications. If I understand clearly, all clarifications they will prepare questions and answers and put it out on the website so that everyone knows."
The last date for submitting request for clarification was April 10. RBI released guidelines for new bank licences in February this year, asking the aspirants to submit applications by July 1, 2013.
Noting that the rupee causes a lot of concerns among investors, he said, "we stand committed to see that we will avoid excess volatility, one area we are trying to do that from the fiscal point of view, from the corporate point of view we have provided a wide range of hedging products and we are encouraging corporate to hedge."
He also said that RBI would continue to provide adequate liquidity so that production sectors are not starved of much needed funding.
Speaking at the seminar, Khan said there was a need for a robust and well-functioning financial market to ensure impetus to economic growth.
"Within the framework of financial market stability, we continue to progressively liberalise our capital account,” Meanwhile Economic Affairs Secretary Arvind Mayaram said, "the government will work towards deepening and broadening the Indian capital market and improving their competitiveness in terms of lower cost of doing business and their completeness by expanding range of instruments offered."


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