The Reserve Bank of India would reintroduce modified capital indexed bonds with structured features of similar instruments prevalent internationally.

"While the CIB would be issued with market-determined real coupon rate that would remain fixed during the currency of the bonds, it would offer inflation-linked returns to the investors," RBI said in its annual policy statement.

It said a memorandum of understanding detailing the rationale and operational modalities of the market stabilisation scheme was signed between the govenrment and RBI on March 25, 2004.

• RBI Credit Policy: Complete Coverage

Treasury bills and dated securities with a face value of Rs 27,000 crore (Rs 270 billion) were issued under the MSS upto May 15, 2004 out of which dated securities amounted to Rs 15,000 crore (Rs 150 billion).

RBI would now allow relatives of the non-resident Indians or people of Indian origin, in India to repay the instalment of loans, interest and other charges taken by the latter directly to the concerned authorised dealers or housing finance institutions.

Considering the progress made by ad hoc committees constituted by banks and the need for taking appropriate action in redesigning procedures and practices, the currency of these committees has been extended for a further period of six months.

The RBI said it expected that banks boards would take the opportunity to streamline their procedures and processes toward fulfilling customers' expectations in terms of transparent and efficient service.