Question

Q.With reference to the Masala Bonds, which of the following statements is/are incorrect?

Select the correct answer using the code given below:

• A.
  1 only
• B.
  2 only
• C.
  Both 1 and 2
• D.
  Neither 1 nor 2

Answer 1

The correct option is B

2 only

Explanation:

Statement 1 is correct: Masala Bonds are rupee-denominated bonds i.e the funds would be raised from overseas market in Indian rupees. According to RBI, any corporate, body corporate and Indian bank is eligible to issue Rupee denominated bonds overseas.

Statement 2 is incorrect: RBI mandates that the money raised through such bonds cannot be used for real estate activities other than for development of integrated township or affordable housing projects. It also can’t be used for investing in capital markets, purchase of land and on-lending to other entities for such activities as stated above.