STRIPS were introduced in India in 2010 for developing a market determined zero coupon yield curve (ZCYC) and help institutional investors in asset-liability management. Further, as STRIPS have zero reinvestment risk, it was felt that they can be attractive to retail/non-institutional investors.
However, except for a few trades in 2010 (securities amounting to ₹ billion have been stripped till date), there has not been any activity in the STRIPS market. Reserve Bank would review the existing guidelines with regard to including more number of eligible securities for stripping, allowing banks in addition to PDs to initiate the process of stripping and reconstitution.