Masala Bonds
About
- Masala Bonds are rupee-denominated bonds i.e. the funds would be raised from the overseas market in Indian rupees.
- They were introduced in 2014.
- Eligible Issuers: Companies registered in India — including public sector undertakings, banks, and infrastructure investment trusts — are permitted to issue Masala Bonds.
- To reach a broader pool of investors, these bonds are typically listed on major international platforms such as the London Stock Exchange or Singapore Exchange.
Advantages of Masala Bonds
- They were introduced by the Reserve Bank of India to encourage foreign investment and reduce India’s reliance on external commercial borrowings in foreign currencies.
- These bonds are directly pegged to the Indian currency. So, investors will directly take the currency risk or exchange rate risks.
- For instance: If the value of Indian currency falls, the foreign investor will have to bear the losses, not the issuer which is an Indian entity or a corporate.