The Reserve Bank said it will launch inflation-indexed national savings securities for retail investors by mid-December.
"These securities are being launched in the backdrop of announcement made in the Budget to introduce instruments that will protect savings from inflation, especially savings of the poor and middle class," an RBI release said.
The proposed inflation-indexed national savings securities will be sold and distributed through all agency banks, including Stock Holding Corporation of India (SHCIL).
"Interest rate on these securities would be linked to final combined consumer price index with a base of 2010=100," the RBI said.
It said the interest rates on these securities will comprise two parts - a fixed rate of 1.5 per cent and inflation-based on CPI which will be compounded in principal on half-yearly basis and paid at the time of maturity.
The RBI said early redemptions will be allowed after one year from the date of issue for senior citizens and three years for all others, subject to penalty charges at the rate of 50 per cent of the last coupon payable.
The face value of one security will be Rs 5,000. An investor can make a minimum investment of Rs 5,000 in such securities while maximum investment will be of Rs 500,000.
The date of issuance for subscription would be announced soon, the apex bank said, adding it will also examine issuance of non-cumulative Inflation Indexed National Saving Securities for retail investors in due course.