State Bonds
RBI OKs STRIPS in state bonds maturing up to 14 yrs, moves system to e-Kuber
This story was originally published at 14:22 IST on 2 June 2025
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MUMBAI – The Reserve Bank of India has made some state government bonds eligible for Separate Trading of Registered Interest and Principal of Securities. The process of stripping or reconstituing a stripped bond will now be carried out on the RBI Core Banking Solution (e-Kuber) rather that on the Negotiated Dealer System platform, according to a gazette notification published Friday.
Fixed coupon bonds issued by state governments and Union territories with a residual maturity of up to 14 years and a minimum outstanding of INR 10.00 billion will be eligible for stripping, the notification said. Stripping is a process of converting periodic coupon payments of an existing government security into tradable zero-coupon securities, which will usually trade in the market at a discount and are redeemed at face value. The central bank had introduced the system for central government bonds in April 2010.
All fixed coupon dated securities issued by the Centre are already eligible for being converted to the zero-coupon instruments. All bonds should be transferable and eligible for computation of the statutory liquidity ratio, the notification said. End
Reported by Aaryan Khanna
Edited by Rajeev Pai
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