{"id":76018,"date":"2025-12-02T12:38:56","date_gmt":"2025-12-02T07:08:56","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=76018"},"modified":"2025-12-02T15:38:48","modified_gmt":"2025-12-02T10:08:48","slug":"masala-bonds","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/masala-bonds\/","title":{"rendered":"Masala Bonds"},"content":{"rendered":"<h2><b>Masala Bonds Latest News<\/b><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The Enforcement Directorate\u2019s (ED) recent decision to issue notices to the Kerala Chief Minister in the KIIFB masala bond investigation marks a significant escalation in a long-running conflict between the LDF government and central agencies over the state\u2019s financing model.<\/span><\/p>\n<h2><b>About Masala Bonds<\/b><\/h2>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">They are <\/span><b>rupee-denominated bonds issued outside India by Indian entities.\u00a0<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The <\/span><b>International Finance Corporation (IFC),<\/b><span style=\"font-weight: 400;\"> an arm of the World Bank, <\/span><b>issued the first <\/b><span style=\"font-weight: 400;\">masala bonds in October <\/span><b>2013 <\/b><span style=\"font-weight: 400;\">as part of its $2 billion dollar offshore rupee programme.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">They are <\/span><b>debt instruments<\/b><span style=\"font-weight: 400;\"> which help <\/span><b>to raise money in local currency from foreign investors.\u00a0<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">That means the <\/span><b>currency risk<\/b><span style=\"font-weight: 400;\">\u2014if exchange rates change\u2014<\/span><b>is on the investor,<\/b><span style=\"font-weight: 400;\"> not the issuer. This <\/span><b>helps Indian companies manage their risks better.<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">To offset the risk of exchange rate fluctuations, bonds <\/span><b>typically offer attractive interest rates <\/b><span style=\"font-weight: 400;\">that are frequently greater than those offered in the investors\u2019 home countries.<\/span><\/li>\n<li style=\"text-align: justify;\"><b>Both <\/b><span style=\"font-weight: 400;\">the <\/span><b>government and private entities can issue<\/b><span style=\"font-weight: 400;\"> these bonds.\u00a0<\/span><\/li>\n<li style=\"text-align: justify;\"><b>Who Can Invest?<\/b>\n<ul>\n<li style=\"text-align: justify;\"><b>Investors outside India <\/b><span style=\"font-weight: 400;\">who would like to invest in assets in India can subscribe to these bonds.\u00a0<\/span><\/li>\n<li style=\"text-align: justify;\"><b>Any resident of that country<\/b><span style=\"font-weight: 400;\"> can subscribe to these bonds which are <\/span><b>members of the <a href=\"https:\/\/vajiramandravi.com\/current-affairs\/financial-action-task-force\/\" target=\"_blank\">Financial Action Task Force<\/a> (FATF).\u00a0<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">That includes <\/span><b>individuals, institutions,<\/b><span style=\"font-weight: 400;\"> and even <\/span><b>financial organisations from countries that follow international standards<\/b><span style=\"font-weight: 400;\"> for fair and secure investing, like those under<\/span><b> IOSCO (International Organisation of Securities Commissions).\u00a0<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">It also <\/span><b>covers multilateral and regional financial institutions <\/b><span style=\"font-weight: 400;\">of which <\/span><b>India is a member.<\/b><\/li>\n<\/ul>\n<\/li>\n<li style=\"text-align: justify;\"><b>Maturity Period:<\/b>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">It <\/span><b>depends on the size<\/b><span style=\"font-weight: 400;\"> of the bond.\u00a0<\/span><\/li>\n<li style=\"text-align: justify;\"><b>For bonds up to USD 50 million<\/b><span style=\"font-weight: 400;\">, the maturity is usually<\/span><b> 3 years.\u00a0<\/b><\/li>\n<li style=\"text-align: justify;\"><b>For larger amounts<\/b><span style=\"font-weight: 400;\">, it can <\/span><b>go up to 5 years,<\/b><span style=\"font-weight: 400;\"> giving investors more flexibility based on their goals.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"text-align: justify;\"><b>What Can The Money Be Used For?<\/b>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The funds raised through Masala bonds are generally earmarked for <\/span><b>productive and regulated purposes.<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The proceeds can <\/span><b>fund affordable housing, infrastructure, refinance rupee loans,<\/b><span style=\"font-weight: 400;\"> or <\/span><b>meet corporate working capital requirements.<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Activities like<\/span><b> buying land, investing in the stock market<\/b><span style=\"font-weight: 400;\">, or<\/span><b> funding real estate projects are off-limit<\/b><span style=\"font-weight: 400;\">s\u2014unless they\u2019ve received specific government approvals.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>Source: <a href=\"https:\/\/www.outlookindia.com\/national\/ed-notice-to-kerala-cm-pinarayi-vijayan-sparks-kiifb-masala-bond-controversy-ahead-of-polls\" target=\"_blank\" rel=\"nofollow noopener\">OI<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Masala Bonds are rupee-denominated bonds issued outside India by Indian entities. Read more about Masala Bonds, Purpose, Investors, Uses, Latest News.<\/p>\n","protected":false},"author":23,"featured_media":76070,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[3988,21,22,23],"class_list":{"0":"post-76018","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"tag-masala-bonds","9":"tag-prelims-pointers","10":"tag-upsc-current-affairs","11":"tag-upsc-prelims-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/76018","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=76018"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/76018\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/76070"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=76018"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=76018"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=76018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}