RBI extends Inflation Indexed Bonds issue

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

 

 

 

RBI's inflation-indexed bonds issue has failed to get much response. Will extending the period by three months help?

 

Although the Reserve Bank has not released any official sales figures, it has given a long extension to the period for which these bonds were to open. From an original eight days (December 23 to December 31), the issue has now been extended to to three months and eight days. The bonds will now be available till March 31st, 2014.

 

Rumour has it that investors' response to the bonds has been negligible and the sales were close to zero. If this is indeed true then instead of just extending the date, it might have been better for the Reserve Bank to re-examine the product characteristics and fix the flaws.

 

According to feedback got from savers, there are a handful of problems with the bond.

 

Firstly, retail fixed-income investors are generally income-oriented and often prefer the periodic income. These bonds have only a cumulative option. Moreover, the lock-in period of ten years is very long. During this time, inflation might fall and investors would get a lower return. The long lock-in heightens this fear.

 

Secondly, the tax free infrastructure bonds that are available nowadays are a more attractive option on a tax-adjusted basis after taking into account all the above problems.

 

Finally, these bonds are available for sale only through banks. Banks' enthusiasm is driven more by the commission earned and the inflation-indexed bonds fetch less commission compared to other products that banks can sell.

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

 

Best Performing Mutual Funds

1. Largecap Funds             Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Franklin India Bluechip
4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds         Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
4. Birla Sun Life Front Line Equity Fund
5. Franklin India Prima

C. Mid and SmallCap Funds          Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
5. Birla Sun Life Dividend Yield Plus
6. SBI Emerging Businesses Fund
7. HDFC Mid-Cap Opportunities Fund
8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds   Invest Online

1. DSP BlackRock MicroCap Fund

2.       Franklin India Smaller Companies

E. Sector Funds          Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds      Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds        Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund
4. Birla Sun Life Gold

H. International funds         Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF