Govt to prematurely redeem WPI bonds

The government of India on Friday said it would buy back the entire wholesale inflation-linked bonds, for an aggregate amount of Rs 6,500 crore, including the accrued interest on the bonds for which bids would be accepted by the Reserve Bank of India (RBI) Stock Market Trading Tips

The government had raised Rs 6,500 crore through these bonds on June 5, 2013, when the Wholesale Price Index-based inflation was at 4.58 per cent for the month of May. Technically, the WPI-linked bond would have given the investors 1.44 per cent more over the existing inflation. The bond was mostly for institutional investors, with only 20 per cent reserved for retail customers.

However, from April 2014, RBI officially adopted the Consumer Price Index-based inflation as its key measure for policymaking and immediately, the WPI-linked bond fell out of favour. Not only had the bonds remained illiquid, wholesale inflation dipped into negative territory, falling as much as to 5.06 per cent in August 2015. This wiped out all the gains from the bond. In November 2015, the latest data point, WPI-based inflation was still at a negative 1.99 per cent Himanshu Tiwari Astrologer Blog
The government launched CPI-linked bonds, exclusively for retail customers, on December 2013 with a coupon of 1.5 per cent above the CPI rate. By then, WPI-linked bonds had fallen out of favour in the secondary market.

"With the primary target shifting to CPI, there was no point carrying on with the old WPI series bonds. People who were stuck with it will now get an exit route and when government comes up with CPI bonds for institutions, they can invest in that," said N S Venkatesh, executive director and chief financial officer of IDBI Bank Ltd Indian stock market astrology prediction

The government said through a notification on the RBI website that it would prematurely redeem the bonds through its available cash balance with the central bank. In a separate statement, RBI said it would facilitate the transaction on January 14 and would have the right to receive less than the amount notified for repurchase."The repurchase of the government stock is purely ad hoc in nature," RBI said in its notification.

The payment "will include the accrued interest on the nominal value of the successful bids/offer accepted by the Reserve Bank of India. The government stocks repurchased in the manner will get prematurely redeemed and interest will cease to accrue on such redeemed government stocks," said the government notification Commodity Market Astrology Tips