Inflation Indexed National Saving Securities (IINSS) Salient Features

Inflation Indexed National Saving Securities (IINSS) Salient Features

As per the press release of the RBI, dated 29th November, 2013 it published that the Reserve Bank of India (RBI) was to launch Inflation Indexed National Saving Securities (IINSS)in consultation with the government of India. And the same is launched successfully. The Inflation Indexed National Saving Securities this time are cumulative in nature.
The features of the Inflation Indexed National Saving Securities are given below so that the interested people can go for it and the issue is open from 23th December, 2013 to 31stDecember, 2013. So here are the salient features of IINSS which will be helpful for the people willing to subscribe the issue.
ü  Eligibility of Subscribers: The subscriber must be an Indian Citizen. The Indian citizens who fall in the categories viz. Individuals, Hindu Undivided Family (HUF), charitable institutions registered under section 25 of the Indian Companies Act and Universities incorporated by Central, State or Provincial Act or declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956) are only eligible for subscribing and investing in the security.
ü  Face value of the Security: Rs. 5000/-
ü  Maximum Investment per applicant: One applicant can invest upto Rs. 5 Lacs i.e. maximum 100 securities can be purchased and minimum one security is to be purchased it means the minimum investment amount is Rs. 5000.
ü  Form of Security:  The security will be in the form of Bond. The amount of investment will be held in the Bond Ledger Account till the tenure of the security.
ü  Rules & Regulations: The provisions of the Government Securities Act, 2006 will be applicable.
ü  Tenure of the Security: The security is to be held for tenure of 10 years.
ü  Interest on Securities: Real Interest Rate plus Inflation Rate. Where Real Interest Rate is fixed @ 1.5% per annum and the Inflated Interest rate depends upon the retail inflation rate. And the interest will be compounded half yearly.
ü  CPI Linkage: For calculating Inflation, final combined CPI will be used as the reference CPI with a lag of three months.
ü  Distribution of Securities:  The securities will be available at all agency banks like State Bank of India and its branches, HDFC Bank, ICICI Bank, and Axis Bank, Stock Holding Corporation of India Ltd (SHCIL).

ü  Early Redemption provisions and ch

arges: The Securities can be redeemed before completion of tenure of 10 years but at the following conditions:

          Securities can be redeemed only after completion of 3 Years from the date of purchase of securities.
          Senior citizens above 65 years can redeem the same after completion of 1 Year from the purchase of securities.
          The penal charges equal to 50% of the last coupon will be payable for early redemption.
          The securities can be redeemed only on coupon dates.
ü  Documents required: In case where the investor invests Rs. 50,000 or more have to provide the Permanent Account Number and when the investor does not hold PAN declaration in Form No.60 or 61, whichever is applicable is to be provided.
ü  Tax Applicability: The interest on securities is taxable under the head “Income from Other Sources” and will be taxed at an applicable slab rate.
ü  Other Uses: The Security will be eligible to act as a collateral security against availing finance from the banks financial Institutions and Non Banking Financial Companies, (NBFC).
ü  Other Features:
          The IINSS are non transferable. But the same can be transferred to the nominee in the case of death of the investor.
          Nomination Facility is available. The investor can nominate one or more nominees who will be the beneficial owner of the security in case of death of the investor.

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