The first ever auction for inflation indexed bonds (IIBs) will be held on June 4 for an amount of Rs 1,000 crore, the Finance Ministry announced on Wednesday.
The auction will be conducted by the Reserve Bank of India using a uniform price method. The bonds will be issued for 10 years and mature in 2023.
Up to 20 per cent of the Rs 1,000 crore (notified amount) will be allotted to eligible individuals and institutions under the scheme for non-competitive bidding for auction of G-secs.
The inflation indexed bonds will be issued within the planned Government market borrowing programme for the first half of 2013-14.
As is the case with the fixed rate conventional bonds, these bonds would be issued through yield-based auction and subsequent re-issues will be through price-based auctions.
Investors would be required to bid for real yield in case of inflation indexed bonds as against nominal yield in the case of fixed rate G-secs.