RBI to buy back 2023 inflation indexed bonds on Jan 14

The Reserve Bank today said the government will be repurchasing the not-so-successful inflation indexed bonds (IIBs) maturing in 2023 through a reverse auction on January 14.
The RBI said the repurchase will be undertaken to prematurely redeem the government stock by utilising surplus cash balances and underscored that this is an "ad hoc" move.
The bonds were launched as an alternative to gold as an investment in the days of high current account deficit.
According to analysts, poor marketing and tax issues led to tepid response to the bond issue, which the RBI deputy governor H R Khan had also conceded as being "unsuccessful".

The IIBs had promised a coupon of 1.50 per cent above the prevailing rate of inflation.
The RBI today said auction for securities will be on price based auction format and conducted using multiple price method.

It asked for the bids to be submitted in electronic format on the Reserve Bank's core banking solution (E-Kuber) system in the first half of the day on January 14.
It added that the central bank reserves the right to decide on the quantum of purchase of individual securities, accept less than the aggregate amount of Rs 6,500 crore and accept/reject any or all of the offers either wholly or partially without assigning any reason.

In the past, the RBI had said that it was working to make the instrument more attractive and was in discussion with the government on this.