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.
Answer & explanation
Answer: (c) Both 1 and 2
Masala bonds were first issued in November 2014 by the International Finance Corporation (IFC), the private-sector lending member of the World Bank Group, as offshore bonds denominated in Indian rupees. In September 2015 RBI opened the same route to any Indian corporate or body corporate, so rupee bonds sold abroad became a debt-raising tool for both public and private companies.
- ✓ 1. IFC is a member of the World Bank Group; its first Masala bonds were 10-year offshore rupee bonds listed on the London Stock Exchange.
- ✓ 2. The bonds are denominated in rupees, so the currency risk lies with the foreign investor. RBI's framework of 29 September 2015 lets any corporate or body corporate issue them, public or private, as borrowing within ECB policy.
Remember · Masala bond = rupee-denominated bond issued abroad; first issuer IFC (World Bank Group), Nov 2014; RBI framework Sept 2015 under ECB; exchange-rate risk borne by the investor.
Sources
- Indian Economic Service, Arthapedia: Masala Bonds ↗ “"Masala Bonds" are the 10 year off-shore rupee bonds issued by International Finance Corporation (IFC) , a member of the World Bank group, in the international capital market in November 2014”
- RBI, A.P. (DIR Series) Circular No. 17: Issuance of Rupee denominated bonds overseas (29 September 2015) ↗ “Eligible borrowers: Any corporate or body corporate as well as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).”
Question and answer: UPSC's official GS Paper I (2016, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·