RBI to repurchase inflation-indexed bonds maturing 2023 on February 11

RBI said it can decide on the quantum of purchase of individual securities as well as can accept less than the aggregate amount of Rs 6,500 crore.

The Reserve Bank on Friday said government will repurchase the inflation-indexed bonds (IIBs) maturing in 2023 through a reverse auction on February 11. The not-so-successful bonds have received a tepid response due to poor marketing and tax issues.

“The Government of India has notified the repurchase of 1.44% Inflation Indexed Government Stock-2023 through reverse auction for an aggregate amount of Rs 6,500 crore”, RBI said in a release.

These bonds were launched as an alternative to gold as an investment in the days of high current account deficit. RBI said the repurchase will be held to prematurely redeem the government stock by utilising surplus cash balances and underscoring that it was an ad-hoc move.

The bids for the auction are to be submitted in electronic format on RBI’s Core Banking Solution (E-Kuber) system on February 11, 2016 (Thursday) between 10.30 AM and 12 Noon. The auction results will be announced on the same day.