RBI Introduces STRIPS in State Government Securities

On 12th June 2025, the Reserve Bank of India (RBI) formally introduced the facility of stripping and reconstitution in State Government Securities (“SGS”).

  • This move extends the existing framework of Separate Trading of Registered Interest and Principal of Securities (STRIPS), which has been operational for eligible Central Government dated securities since April 1, 2010.

What are STRIPS?

  • STRIPS involve splitting a standard coupon-bearing government bond into its individual cash flows—each interest payment and the principal repayment.
  • These separated components are then traded as zero-coupon instruments.
  • For instance, a 10-year State Government bond with annual interest payments can be stripped into 11 ....
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