Question

With reference to `IFC Masala Bonds’, sometimes seen in the news, which of the statements given below is/are correct?

1. The International Finance Corporation, which offers these bonds, is an arm of the World Bank.
2. They are the rupee-denominated bonds and are a source of debt financing for the public and private sector.

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 C

Both 1 and 2
Masala Bonds are rupee-denominated bonds, i.e, the funds would be raised from overseas market in Indian rupees. These bonds are issued in Indian currency rather than local currency.

Indian corporates usually issue Masala Bonds to raise funds from foreign investors. As it is pegged into Indian currency, if the rupee rates fall, investors bear the risk.

The first Masala bond was issued in 2014 by IFC for the infrastructure projects in India.The International Finance Corporation, which offers these bonds, is an arm of the World Bank