RBI Launches STRIPS in Government Securities from April 2010
Current · Source: Reserve Bank of India · RBI/2009-10/360 · issued 25 Mar 2010 · ~1 min read
Quick answerRBI introduces Separate Trading of Registered Interest and Principal of Securities (STRIPS) in government securities from April 1, 2010, creating sovereign zero-coupon bonds to develop a market-determined zero-coupon yield curve and aid asset-liability management.
The rule, in the simplest words
Separate Trading of Registered Interest and Principal of Securities (STRIPS) allows [splitting government securities into interest and principal parts] to be traded separately
STRIPS create [sovereign zero-coupon bonds, which are government bonds that do not pay periodic interest] to help develop a market-determined zero-coupon yield curve
STRIPS help with [asset-liability management, which is managing a company's assets and liabilities to minimize risk] by eliminating periodic interest payments and the need for reinvestment
STRIPS provide a new tool for [institutional investors, such as banks and insurance companies, to manage their investments] with zero reinvestment risk
How it plays out — a real example
A treasury officer in Mumbai can use STRIPS to manage the bank's assets and liabilities more effectively, by investing in zero-coupon bonds that match the bank's long-term liabilities, thereby reducing the risk of reinvestment. This officer can also use STRIPS to create new retail products, such as zero-coupon bonds, to attract individual investors. By doing so, the treasury officer can help the bank to better manage its assets and liabilities, while also providing innovative investment options to its customers.
What changed
RBI announced the introduction of STRIPS in government securities, effective April 1, 2010, as per the Annual Policy Statement 2009-10. This allows separate trading of interest and principal components of eligible government securities, creating zero-coupon instruments.
What it means for you
Banks and institutional investors gain a new tool for asset-liability management with zero reinvestment risk, as STRIPS eliminate periodic interest payments. The move also helps develop a market-determined zero-coupon yield curve, enhancing pricing benchmarks for fixed-income markets.
What you must do
Review the detailed operational guidelines enclosed with the circular for stripping/reconstitution processes.
Update internal systems and trading platforms to handle STRIPS transactions from April 1, 2010.
Train treasury and risk management teams on the features and uses of zero-coupon sovereign bonds.
Assess potential benefits for asset-liability matching and retail product offerings using STRIPS.
Who it affects
All market participants in government securities, Institutional investors (banks, insurance companies, pension funds), Retail and non-institutional investors, Treasury departments of banks
❓ Common questions
Regulatory timeline
Stated effective dateeffective April 1, 2010
Decoded by BankPulse2026-06-19 07:05 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What are STRIPS in government securities?
STRIPS allow the separate trading of the interest and principal components of eligible government securities, creating sovereign zero-coupon bonds with no periodic interest payments.
When do these guidelines take effect?
The guidelines come into effect from April 1, 2010, as per the RBI circular dated March 25, 2010.
How do STRIPS benefit investors?
STRIPS eliminate reinvestment risk since they are discounted instruments with no intermediate cash flows, making them useful for asset-liability management and attractive to retail investors.
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/360
IDMD. DOD. 07 /11.01.09/2009-10
March 25, 2010
To
All Market Participants
Dear Sir,
Guidelines on Stripping/Reconstitution of Government Securities
Please refer to paragraph No.101 of the Annual Policy Statement for the year 2009-10. As indicated therein, it has been decided to introduce Separate Trading of Registered Interest and Principal of Securities (STRIPS) in Government Securities as part of the efforts to develop the Government Securities market.
2. STRIPS in Government Securities will ensure availability of sovereign zero coupon bonds, which will lead to the development of a market determined zero coupon yield curve (ZCYC). STRIPS will also provide institutional investors with an additional instrument for their asset-liability management. Further, as STRIPS have zero reinvestment risk (discounted instruments with no periodic interest payment thereby obviating the need for reinvestment of intermediate cash flows arising out of the investment), they can be attractive to retail/non-institutional investors.
3. The terms and conditions governing the stripping/reconstitution of Government of India securities are set out in the RBI Notification IDMD.1762/2009-10 dated October 16, 2009.
4. Detailed guidelines outlining the process of stripping/reconstitution and other operational procedures regarding transactions in STRIPS are enclosed. These guidelines shall come into effect from April 01, 2010 .
Yours faithfully,
(K.V. Rajan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/360 · issued 25 Mar 2010. The plain-English explanation above is BankPulse’s own independent summary.
Update internal systems and trading platforms to handle STRIPS transactions from April 1, 2010.
📜 Compliance
Review the detailed operational guidelines enclosed with the circular for stripping/reconstitution processes.
Train treasury and risk management teams on the features and uses of zero-coupon sovereign bonds.
Assess potential benefits for asset-liability matching and retail product offerings using STRIPS.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All market participants in government securities, Institutional investors (banks, insurance companies, pension funds), Retail and non-institutional investors, Treasury departments of banks), your first concrete step on “RBI Launches STRIPS in Government Securities from April 2010” is: “Review the detailed operational guidelines enclosed with the circular for stripping/reconstitution processes.” (RBI issued this 25 Mar 2010).
Circular: RBI/2009-10/360 -- RBI Launches STRIPS in Government Securities from April 2010
Issued: 25 Mar 2010
Action required: Review the detailed operational guidelines enclosed with the circular for stripping/reconstitution processes.
Action required: Update internal systems and trading platforms to handle STRIPS transactions from April 1, 2010.
Action required: Train treasury and risk management teams on the features and uses of zero-coupon sovereign bonds.
Action required: Assess potential benefits for asset-liability matching and retail product offerings using STRIPS.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5546&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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