MASALA Bonds English

What Is Masala Bond?

Masala Bonds are Indian rupee-denominated bonds issued by Indian entities in overseas markets. This financial instrument allows issuers to raise funds in rupees from foreign investors. It’s beneficial for reducing currency risk since the debt obligation is in the issuer’s home currency. These bonds are issued to finance the infrastructure project.

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Masala Bonds Meaning

Masala bonds are Indian rupee-denominated bonds issued overseas, primarily for infrastructure projects in India. These bonds attract foreign investment, but their funds face restrictions, being earmarked specifically for infrastructure development, thereby limiting their use to this vital economic sector.

By issuing these bonds, Indian entities gain access to a broader investor base, allowing for greater capital inflow without the direct risk of currency fluctuations. This is particularly advantageous in times of a volatile Indian rupee, as the currency risk shifts to investors rather than issuers.

Furthermore, Masala Bonds serve as a financial instrument for international investors looking to invest in Indian markets wi