The interest rate is fixed and is paid twice a year on the adjusted principal. So if your principal is larger because of inflation you earn more interest. If it's lower because of deflation, you earn less.
These securities provide a safeguard against deflation as well as against inflation since they guarantee that you'll get back no less than par, or face value, at maturity.
Personal loans, most financial planners would say, is a bad thing on your balance sheet. And it is simply because of the fact that the interest charged is rather high - anywhere between 12 per cent to 50 per cent depending on the profile of the person.
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