IDBI Bank today announced that retail investors can buy the Reserve Bank of India's inflation indexed bonds (IIBs) via the bank's portal called IDBI Samriddhi. On June 4, the Reserve Bank of India had sold Rs 1,000 crore worth of 10-year bonds at a real yield of 1.44 percent over the wholesale price-based inflation index.
Retail investors can invest as much as Rs 25 lakh per deal via the Samridhi portal. The minimum investment amount is Rs10,000 and in multiples of Rs 10,000 thereafter.
A retail investor can buy IIB even via mobile if she is registered with the portal. And one need no be an IDBI Bank account holder to avail of this facility, provided she has a demat account and a valid permanent account number.
"IDBI is leveraging technology, where the retail investor can buy the bonds anywhere anytime with mobile. And the portal-based solution will provide ease of entry and exit by the retail/ mid-segment investor," said H R Khan, Deputy Governor, RBI.
Unlike capital indexed bonds (CIBs), which were launched in 1997, IIBs will provide inflation protection to both principal and interest payments. CIB did so only for principal amount.
As per the RBI website, "Inflation component on principal will not be paid with interest but the same would be adjusted in the principal by multiplying principal with index ratio (IR). At the time of redemption, adjusted principal or the face, whichever is higher, would be paid. Interest rate will be provided protection against inflation by paying fixed coupon rate on the principal adjusted against inflation."
IIBs will be issued for a tenor of 10 years. An exclusive series only for retail investors is going to be launched around October 2013, which is in the second half of the current fiscal year.