RUPEE DENOMINATED BONDS (MASALA BONDS)

Rupee denominated bonds (RDBs) or Masala bonds are becoming more enticing for both investors and issuers, and with these bonds, India also stands at a profitable position. Normally Indian corporate issues debt instruments to raise money from the Indian investors. Unlike debt instruments, masala bonds are innovative type of bonds, which are linked to rupee but issued to overseas investors. Masala bond is an effort to protect issuers from currency risk and instead transfer the risk of currency to investors buying these bonds. The Reserve Bank of India (RBI) issued a circular authorizing the issuance of masala bonds overseas on September 29, 2015. International Finance Corporation (IFC), a private sector investment arm of the world bank named, issued and listed masala bonds, on London Stock Exchange (LSE) in need of infrastructure projects in India. Mortgage lender Housing Development Finance Corporation (HDFC) was the first Indian company who raised Rs 5000 crore by issuing masala bonds. This article gives an overview about masala bonds as how it can be issued, its uniqueness, merits, demerits and its future.