Press Information Bureau

Government of India

Ministry of Finance

11-April-2012 19:16 IST

Special Floating Rate Bond for Rs 7,000 Crore (Nominal) Issued

Press Communique

Government of India has announced the issue of ‘Postal Life Insurance Government of India Special Floating Rate Security 2022’, (hereinafter briefly described as “Special Floating Rate Bond”) for Rs 7,000 crore (nominal). The Special Bonds are being issued at par to Department of Post on March 30, 2012 as part conversion of the frozen corpus of Post Office Life Insurance Fund (POLIF) and Rural Post Life Insurance Fund (RPOLIF).

The investment in the Special Floating Rate Bond by the banks and Insurance Companies will not be reckoned as an eligible investment in Government Bonds for their statutory requirements. However, such investment by the insurance companies will be eligible to be reckoned as investment under “other Approved Bonds” category as defined under Insurance Regulatory and Development Authority (Investment) Regulations, 2000. Further, the investment by the Provident Funds, Gratuity Funds, Superannuation Funds, etc. in the Special Bonds will be treated as an eligible investment under the administrative order of the Ministry of Finance.

The Special Floating Rate Bonds will be transferable and eligible for market ready forward transactions (Repo).

Department of Economic Affairs, Ministry of Finance

New Delhi: April 11, 2012

DSM/SS

Special Floating Rate Bond issuance limits statutory government bond eligibility while permitting insurance classified investments and repo tradability. The Government issued the Postal Life Insurance Special Floating Rate Security 2022 to the Department of Post at par to convert frozen POLIF and RPOLIF corpus. Banks and insurance companies' investments will not count as eligible government bond investments for statutory requirements, though insurance holdings may be treated as 'other Approved Bonds' under insurance investment regulations. Provident, gratuity and superannuation fund investments will be eligible under the Ministry of Finance administrative order. The Special Floating Rate Bonds are transferable and eligible for market ready forward transactions, including repo.