IINSS-C | National Savings Securities HDFC Bank

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

What is the product all about?

  • The Inflation Indexed National Savings Securities-Cumulative(IINSS-C) bonds will offer investors a return that’s 1.5% more than inflation based on the consumer-price-index.Interest will be compounded half yearly, enhancing effective yield on investments.
  • The minimum investment limit is Rs. 5,000/- (five thousand).
  • The maximum limit is Rs. 500,000/- (five lakh) per applicant per annum.

How to Invest?

Only retail investors would be eligible to invest in these securities. The retail 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).

Duly filled application forms will be accepted at designated 1381 HDFC Bank Branches.

1. What is the inflation index to which inflation rate will be linked?

  • Inflation rate will be based on the final combined Consumer Price Index [(CPI) base: 2010=100].
  • The final combined CPI will be used as reference CPI with a lag of three months. For example, the final combined CPI for September 2013 will be used as reference CPI for whole of December 2013.

2. Who is eligible to invest in the Inflation Indexed National Saving Securities-Cumulative (IINSS-C)?

  • Only retail investors would be eligible to invest in these securities. The retail 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).

3. What is the interest rate on these securities?

  • There will be two parts in the interest rate. One, fixed rate of 1.5% per annum and second, inflation rate.
  • For example, if inflation rate during the six months is 5%, then interest rate for this six months would be 5.75% (i.e. fixed rate -0.75% and inflation rate -5%).

4. Is there any floor as inflation may turn into deflation at times?

  • Yes, fixed rate of 1.5% would act as a floor, which means that 1.5% per annum interest rate is guaranteed if there is deflation.
  • For example, if inflation rate is (-) 5%, then interest rate should be (-) 3.5% by simple calculation. But in such case, negative inflation will not be recognised and investors would get fixed rate of 1.5% (please see example 2 at 23).

5. When do I get interest?

  • Interest will be accrued and compounded in the principal on half-yearly basis and paid along with principal at the time of redemption.