Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: form 3cd :: VAT RATES :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: due date for vat payment :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: cpt :: VAT Audit :: articles on VAT and GST in India
 
 
« General »
 Data shows new tax regime widely adopted
 Confusion over GST persists: Wholesale grain market affected, sales fall by 40 percent in Pune
 Slow tax growth reflects companies' GST troubles
 What is PAN card? Why is it important?
 Govt to cut down executive discretion on tax laws
 Businesses can start filing July returns on GSTN from August 5
 Are you earning abroad? Know the tax rules
 Attention last minute tax filers! Know about key changes made by govt this year
 Accounting relief for IndAS companies
 How you can reduce your tax to zero if you have income within Rs 10 lakh
 NRIs’ overseas bank info needed only for tax refund

RBI to announce STRIP rules
January, 12th 2010

The Reserve Bank of India will announce rules for the so-called STRIPS trading in government debt by January-end and issue floating rate bonds worth Rs 18,000 crore by March to increase the depth of the debt market and enable banks to manage their portfolio risks better, a central bank official said.

STRIPS, or Separate Trading of Registered Interest and Principal of Securities, is the process of separating principal and interest payments on bonds to turn them into zerointerest securities. "The guidelines for STRIPS are finalised and will be notified soon, said the official, requesting anonymity , adding that the notification on auction of the first tranche of floating rate bonds is expected within a fortnight.

These developments come ahead of a meeting scheduled on Monday with primary dealers, where the RBIs internal debt management office will seek suggestions to launch cash default swaps, in which a buyer who pays a seller receives in exchange a payoff for defaults. The meeting, coming after two months, assumes significance as it is the last before the central banks much-awaited monetary policy on January 29.

The RBI had released the draft guidelines on STRIPS on May 14, 2009 and had said in April it will issue the final rules in the year ending March 31. RBI had said in the draft norms that bonds with maturity dates of January 2 and July 2, irrespective of the year of maturity, will be eligible for stripping. Primary dealers and treasury heads of banks welcomed the move to issue more floating bonds as well as the STRIPS norms.

"We have raised the demand in three meetings with the central banks internal debt management department before they issued the first tranche of bonds worth Rs 2,000 crore on December 18," the head of a primary dealership said.

Banks face asset-liability mismatches when costs and returns of funds fluctuate. Floating rate bonds so-called as their interest rates are pegged to a benchmark such as the treasury bill rate and adjusted periodically help them to hedge this risk to a certain extent as the return changes in tandem with the interest rate to which it is pegged.

Private and foreign banks typically lap up floating rate bonds for the same reason. Interest rate of bonds worth Rs 2,000 crore that will mature in 11 years were linked to that of 182-day treasury bills. While it was pegged at 3.79% for the first six months, the interest, or coupon, will be reset every six months as per the average yields of the last three auctions of 182-day treasury bills.

Banks also do not have to provide for losses on floating bonds under mark-to-market provisioning norms that give a realistic appraisal of an institutions current financial situation. Bond yields and prices move in opposite directions.

Banks have to provide for losses or profits every quarter after marking the prices at which the bonds were acquired to the closing rate on the last trading day of the quarter. The benchmark 10-year bond has seen hardening of yields by over 2.5 percentage points last year.

While the floating rate papers are not usually traded as there is little chance of a loss in such debts, the introduction of STRIPS is likely to trigger high volumes in government debt. Currently, 10 floating bonds worth Rs 43,350 crore are in circulation.

Of the governments budgeted borrowing of Rs 4.92 lakh crore for the current year, more than 85% is completed as of now. The next auction is Rs 8,000 crore of treasury bills on Wednesday and Rs 10,000 crore of government bonds on Friday.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Bath SEO Company Birmingham SEO Company Bradford SEO Company Brighton and Hove SEO Company Bristol SEO Company Cambridge SEO Company Canterbury SEO Company Carlisle SEO Company Chester SEO Company Chichester SEO Company Coventry SEO Compan

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions