Inflation Indexed National Saving Securities- Cumulative (IINSS-C)

The Government of India, in consultation with Reserve Bank of India, has decided to launch Inflation Indexed National Savings Securities-Cumulative (IINSS-C) for retail investors in the second half of December 2013.

These securities are being launched in the backdrop of announcement made in the Union Budget 2013-14 to introduce instruments that will protect savings from inflation, especially the savings of the poor and middle classes.

The distribution/ sale of IINSS-C would be through banks. The eligible investors would include 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).

Interest rate on these securities would be linked to final combined Consumer Price Index [CPI (Base: 2010=100)]. Interest rate would comprise two parts, i.e. fixed rate (1.5% per annum) and inflation rate based on CPI and the same will be compounded in the principal on half-yearly basis and paid at the time of maturity. Early redemptions will be allowed after one year from date of issue for senior citizens (i.e. above 65 years of age) and 3 years for all others, subject to penalty charges at the rate of 50% of the last coupon payable for early redemption. Early redemptions, however, can be made only on coupon dates.

Other details of the scheme would be announced by the Reserve Bank of India. The issuance of non-cumulative Inflation Indexed National Saving Securities for retail investors will be examined in due course.

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Impact of new banks on Indian Economy?

The Reserve Bank of India has given green signal for new banking license that said the once the process is completed the new banks would be there in banking sector. Many private companies and non-financial institutions could start private banks in India.

The nationalization of banks is the milestone in Indian banking system that boomed the economy. There are many private banks in India apart from the 19 nationalized banks. The apex bank would aim to check the money laundering and other various norms in the banking before allowing more private players into the banking sectors.

Recently there were reports about the violation of norms by various banks in the media and the RBI has taken stern actions in that directions. Another important duty of the RBI is – its custodian of Indian economy, being playing the role, the bank would try to check the liquidity into the market.

The high inflation and devaluation of rupees against the US dollar are some of the major challenges the RBI has to address with more stern action. Liquidity is the major cause for many fiscal crises in the country and those would be in the priority to-do list of the apex bank.

With the entry of the new banks into the sectors, the task to check the liquidity and cash flow into the market would be big challenge for the apex bank to follow. More branches involve more transactions boosting the velocity of money in the economy.

That could be help the economy in boosting market conditions as well as fueling inflation, as the too much money chasing to too few goods. On the other hand, the credit market would also take a big leap with the entry of new banks; the volume of credit market in terms of loans would go up.

There would another danger for the bank having non-performing assets, which could also have adverse impact on the economy’s health. If the credit market, bad recovery and non-performing assets would go up beyond control the sure that could adverse the growth pace of the Indian economy.

There is no doubt that the new banks would prove positive for the economy , as in the guidelines the apex bank has said that more branches need to be opened in the rural areas. This is going to be the best thing that the bank tried to boom the rural banking sector, which said to be in gloom for many years.

Indian economy needs a big push to keep its growth rate moving forward from 5 per cent to 8-9 percent in coming years. And the entry of new banks could help the economy to revive and cherish during ongoing global economic slowdown.

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Fake E-Mail In The Name of RBI

phishing caution

Now, a fake e mail may land up in your mail box, allegedly from India’s Central bank, asking denizens to secure their bank account details with the RBI. So, any time you get a mail from the RBI think twice. Experts said, this is an attempt by fraudsters to compel people into giving away bank account details and lose hard-earned money, security.

The fake email says that RBI has launched a new security system, asking users to click on a link to open a page with list of banks in place. Once anyone chooses a particular bank, it asks for all net banking details, including card numbers and the secret three digit CVV number, and other details.

The RBI has also been flooded with queries from citizens across the country. A senior RBI official said "I get at least four such calls a day," RBI is cautioning people that the central bank, "has not developed any such software and nor has it sent any such mail asking online banking customers to update their account details to secure their online accounts." The RBI does not even have any mail id with extension@rbi.com, the central bank says.

The bank has warned that "Members of public receiving such mails should not open the attachment and/or try to download the attachment on their computers. This is a phishing mail and accessing the mail in any manner could result in identity theft"

Defense analyst C Uday Bhaskar, said "Online frauds are increasing and predictively so. As your dependency on cyber increases, it concurrently opens up to misuse. People should not panic but awareness must increase in a big way also”

Now the bank is planning a massive pan-India publicity campaign to educate people on such scams and create awareness about not responding to such emails or messages.

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