Archive · 5 Sep 2025
Masala Bonds: Definition, Benefits for Issuers, and Global Investors
Masala bonds are like special bonds sold by Indian companies to investors outside of India.
These bonds are in Indian rupees, so investors take on the risk of the rupee's value changing.
This helps Indian companies get money for projects like building homes or infrastructure, without worrying about how the value of the dollar changes.
Investors like them because they can earn potentially higher interest rates and get to invest in India's economy.
It is named 'Masala' bonds to signify the mix of Indian and international funding connections, just like a mixture of spices.
Masala bonds are rupee-denominated bonds issued by Indian entities in foreign markets.
They were first introduced in 2014 by the International Finance Corporation.
Investors, not issuers, bear the currency risk with Masala bonds.
Funds raised can be used for infrastructure, affordable housing, and other projects.
Masala bonds give global investors direct exposure to India's growth.
- Who
- Indian entities and global investors
- What
- Rupee-denominated bonds issued in foreign markets
- When
- Introduced in 2014
- Where
- Issued in foreign markets
- Why
- To provide access to global capital and mitigate currency risks
- Definition
- Rupee-denominated bonds issued by Indian entities in foreign markets
- Issuers
- Indian corporations, listed companies, NBFCs, and government-associated entities
- Tenure
- Minimum three years for issues up to USD 50 million; five years for higher sums
- Purpose of Funds
- Affordable housing, infrastructure, refinancing rupee loans, or working capital
- Currency Risk
- Investors, not issuers, bear the currency risk
- Listing
- Typically listed on exchanges like London or Singapore