http://arthapedia.in/index.php?title=Masala_Bonds&feed=atom&action=historyMasala Bonds - Revision history2024-03-29T09:44:00ZRevision history for this page on the arthapediaMediaWiki 1.17.0http://arthapedia.in/index.php?title=Masala_Bonds&diff=4029&oldid=prevRosemary.a at 04:50, 5 October 20172017-10-05T04:50:02Z<p></p>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>In order to further provide relief in respect of gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company to secondary holders as well, it was proposed in Finance Bill, 2017 to amend section 48 providing that the said appreciation of rupee shall be ignored for the purposes of computation of full value of consideration.Further, with a view to facilitate transfer of Rupee Denominated Bonds from non-resident to non-resident, it is proposed to amend section 47 so as to provide that any transfer of capital asset, being rupee denominated bond of Indian company issued outside India, by a non- resident to another non- resident shall not be regarded as transfer. These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>In order to further provide relief in respect of gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company to secondary holders as well, it was proposed in Finance Bill, 2017 to amend section 48 providing that the said appreciation of rupee shall be ignored for the purposes of computation of full value of consideration.Further, with a view to facilitate transfer of Rupee Denominated Bonds from non-resident to non-resident, it is proposed to amend section 47 so as to provide that any transfer of capital asset, being rupee denominated bond of Indian company issued outside India, by a non- resident to another non- resident shall not be regarded as transfer. These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.</div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">RBI as at the end of September 2017 has given approvals for issuance of bonds worth Rs. 44,000 crore (i.e. USD 6.8 bn) and companies have raised about Rs. 32,000 crore (i.e. USD 5 bn) through the masala bond route till then.</ins></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">As the limit for FPI investment in corporate bonds (Rs. 244,323 or USD 37.5 bn) crore were getting exhausted and since masala bonds were also a part of this limit, further issuances had to be put on hold. In order to ensure that the financing needs of the corporate sector are not hurt, it was decided that with effect from October 3, 2017, Masala bonds will no longer form a part of the limit for FPI investments in corporate bonds. They will form a part of the ECBs and will be monitored accordingly. Thus issuance of masala bonds can restart. Further, the amount of Rs. 44,001 crore (USD 6.8 bn) arising from shifting of Masala bonds will be released for FPI investment in corporate bonds over the next two quarters, i.e. Rs. 27,000 crore (USD 4.2 bn)  in Q3 of FY 2018 and Rs.17,001 crore (USD 2.6 bn) in Q4 of FY 2018. Out of the increased limits, an amount of Rs. 9,500 crore (USD 1.5 bn)  in each quarter will be available only for investment in infrastructure sector by long term FPIs (i.e., Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks).</ins></div></td></tr>
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</table>Rosemary.ahttp://arthapedia.in/index.php?title=Masala_Bonds&diff=3834&oldid=prevRosemary.a at 10:03, 2 February 20172017-02-02T10:03:35Z<p></p>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>The foreign currency - Rupee conversion will be at the market rate on the date of settlement for the purpose of transactions undertaken for issue and servicing of the bonds.</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>The foreign currency - Rupee conversion will be at the market rate on the date of settlement for the purpose of transactions undertaken for issue and servicing of the bonds.</div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">The Finance Act, 2016, inter-alia, amended section 48 of the Income Tax Act with effect from the 1 April, 2017 so as to provide that the gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company subscribed by the non-resident, shall be ignored for the purpose of computation of full value of consideration. </ins></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">In order to further provide relief in respect of gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company to secondary holders as well, it was proposed in Finance Bill, 2017 to amend section 48 providing that the said appreciation of rupee shall be ignored for the purposes of computation of full value of consideration.Further, with a view to facilitate transfer of Rupee Denominated Bonds from non-resident to non-resident, it is proposed to amend section 47 so as to provide that any transfer of capital asset, being rupee denominated bond of Indian company issued outside India, by a non- resident to another non- resident shall not be regarded as transfer. These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.</ins></div></td></tr>
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</table>Rosemary.ahttp://arthapedia.in/index.php?title=Masala_Bonds&diff=3482&oldid=prevRosemary.a at 19:58, 20 April 20162016-04-20T19:58:37Z<p></p>
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<tr><td class='diff-marker'>−</td><td style="background: #ffa; color:black; font-size: smaller;"><div>"Masala Bonds" are the 10 year [http://www.investopedia.com/terms/o/offshore.asp off-shore] rupee bonds issued by [http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc International Finance Corporation (IFC)], a member of the World Bank group, in the international capital market in November 2014, to raise funds for supporting private sector infrastructure development initiatives in India. Masala bonds are listed in [http://www.londonstockexchange.com/home/homepage.htm London Stock Exchange].</div></td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div>"Masala Bonds" are the 10 year [http://www.investopedia.com/terms/o/offshore.asp off-shore] rupee bonds issued by [http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc International Finance Corporation (IFC)], a member of the World Bank group, in the international capital market in November 2014, to raise funds for supporting private sector infrastructure development initiatives in India. Masala bonds are listed in [http://www.londonstockexchange.com/home/homepage.htm London Stock Exchange].  </div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins class="diffchange diffchange-inline">Subsequently, on [https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=10049 29 September 2015], RBI put in place a framework for issuance of Rupee denominated bonds overseas within the overarching [https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9840 External Commercial Borrowing (ECB) policy], in order to facilitate Rupee denominated borrowing from overseas. (ECBs refer to commercial loans in the form of bank loans, securitized instruments (e.g. floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares), buyers’ credit, suppliers’ credit availed of from non-resident lenders with a minimum average maturity of 3 years.)</ins></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins class="diffchange diffchange-inline">The term Masala bonds now extends to any rupee denominated bonds issued to overseas buyers even though RBI has not resorted to the use of this name in their guidelines.</ins></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins class="diffchange diffchange-inline">The term "masala" stands for Indian spices, which gives Indian cuisine its characteristic flavour, and helped India gain a place in the global trade map.</ins></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins class="diffchange diffchange-inline">By usage of the term, Masala Bonds are similar to [http://www.investopedia.com/terms/d/dim-sum-bond.asp dimsum bonds] -bonds issued outside China but denominated in Chinese currency. But they are different from [http://en.wikipedia.org/wiki/Samurai_bond samurai bonds] which are  Yen (Japanese currency)-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.</ins></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins class="diffchange diffchange-inline">'''Rationale''' </ins></div></td></tr>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>Masala bonds, like any other off-shore bonds, are intended for those foreign investors who want to take exposure to Indian assets, yet constrained from doing it directly in the Indian market or prefer to do so from their offshore locations. The settlement of the bonds will be in US dollars but since they are pegged to the Indian currency -rupee-, investors will directly take the currency risk or exchange rate risks. Settlement is done in US dollars because of the limited [http://www.investopedia.com/terms/c/convertibility.asp convertibility] of rupee.  </div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>Masala bonds, like any other off-shore bonds, are intended for those foreign investors who want to take exposure to Indian assets, yet constrained from doing it directly in the Indian market or prefer to do so from their offshore locations. The settlement of the bonds will be in US dollars but since they are pegged to the Indian currency -rupee-, investors will directly take the currency risk or exchange rate risks. Settlement is done in US dollars because of the limited [http://www.investopedia.com/terms/c/convertibility.asp convertibility] of rupee.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="background: #ffa; color:black; font-size: smaller;"><div><del style="color: red; font-weight: bold; text-decoration: none;">The term "masala" stands for Indian spices, which gives Indian cuisine its characteristic flavour, and helped India gain a place in the global trade map. IFC, established in 1956 and owned by 184 member countries, is the largest global development institution focused exclusively on the private sector companies and financial institutions in developing countries. </del></div></td><td colspan="2"> </td></tr>
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<tr><td class='diff-marker'>−</td><td style="background: #ffa; color:black; font-size: smaller;"><div><del class="diffchange diffchange-inline">Masala bonds were issued on 10 November 2014 under IFC’s $2 billion offshore rupee program and yields 6.3%. </del>IFC <del class="diffchange diffchange-inline">issued the bonds in London, a premier financial center and the investment banker, J.P. Morgan was the sole arranger for the bond. The vast majority of investors in </del>masala bonds <del class="diffchange diffchange-inline">are European insurance companies.  Proceeds from this 10-year, 10 billion Indian rupee bond (equivalent to $163 million) will be used to support a forthcoming infrastructure bond issuance by [http://www.axisbank.com/ Axis Bank], back in India. Thus, Masala bonds pave the way for more foreign investment to help meet India’s private sector development needs.</del></div></td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins class="diffchange diffchange-inline">'''</ins>IFC<ins class="diffchange diffchange-inline">'s </ins>masala bonds<ins class="diffchange diffchange-inline">'''</ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="background: #ffa; color:black; font-size: smaller;"><div>Masala bonds <del class="diffchange diffchange-inline">are the first rupee bonds listed </del>on <del class="diffchange diffchange-inline">the [http://www.londonstockexchange.com/home/homepage.htm London Stock Exchange].  They are the longest-dated bonds in the </del>offshore rupee <del class="diffchange diffchange-inline">markets</del>, <del class="diffchange diffchange-inline">building on earlier offshore rupee issuances </del>by <del class="diffchange diffchange-inline">IFC at three-, five-</del>, and <del class="diffchange diffchange-inline">seven-year maturities</del>. <del class="diffchange diffchange-inline">However, these earlier bond issuances were not </del>issued <del class="diffchange diffchange-inline">under </del>the <del class="diffchange diffchange-inline">nomenclature of masala </del>bonds<del class="diffchange diffchange-inline">. As on date</del>, the <del class="diffchange diffchange-inline">present issue </del>of masala bonds <del class="diffchange diffchange-inline">is a one-time issue</del>. <del class="diffchange diffchange-inline">Hence</del>, <del class="diffchange diffchange-inline">subsequent issuances of the off shore </del>rupee <del class="diffchange diffchange-inline">bonds by IFC may also not </del>be <del class="diffchange diffchange-inline">under this nomenclature</del>.</div></td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins class="diffchange diffchange-inline">The first </ins>Masala bonds <ins class="diffchange diffchange-inline">were issued </ins>on <ins class="diffchange diffchange-inline">10 November 2014 under IFC’s $2 billion </ins>offshore rupee <ins class="diffchange diffchange-inline">program and yields 6.3%.IFC</ins>, <ins class="diffchange diffchange-inline">established in 1956 and owned </ins>by <ins class="diffchange diffchange-inline">184 member countries</ins>, <ins class="diffchange diffchange-inline">is the largest global development institution focused exclusively on the private sector companies </ins>and <ins class="diffchange diffchange-inline">financial institutions in developing countries</ins>. <ins class="diffchange diffchange-inline">IFC </ins>issued the bonds <ins class="diffchange diffchange-inline">in London</ins>, <ins class="diffchange diffchange-inline">a premier financial center and </ins>the <ins class="diffchange diffchange-inline">investment banker, J.P. Morgan was the sole arranger for the bond. The vast majority </ins>of <ins class="diffchange diffchange-inline">investors in </ins>masala bonds <ins class="diffchange diffchange-inline">are European insurance companies</ins>. <ins class="diffchange diffchange-inline"> Proceeds from this 10-year</ins>, <ins class="diffchange diffchange-inline">10 billion Indian </ins>rupee <ins class="diffchange diffchange-inline">bond (equivalent to $163 million) will </ins>be <ins class="diffchange diffchange-inline">used to support a forthcoming infrastructure bond issuance by [http://www.axisbank.com/ Axis Bank], back in India. Thus, Masala bonds pave the way for more foreign investment to help meet India’s private sector development needs</ins>.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="background: #ffa; color:black; font-size: smaller;"><div><del class="diffchange diffchange-inline">Yet by usage of the term, </del>Masala <del class="diffchange diffchange-inline">Bonds </del>are <del class="diffchange diffchange-inline">similar to </del>[http://www.<del class="diffchange diffchange-inline">investopedia</del>.com/<del class="diffchange diffchange-inline">terms</del>/<del class="diffchange diffchange-inline">d/dim-sum-bond</del>.<del class="diffchange diffchange-inline">asp dimsum bonds</del>] <del class="diffchange diffchange-inline">-bonds issued outside China but denominated in Chinese currency</del>. <del class="diffchange diffchange-inline">But they </del>are <del class="diffchange diffchange-inline">different from [http://en.wikipedia.org/wiki/Samurai_bond samurai </del>bonds<del class="diffchange diffchange-inline">] which are  Yen (Japanese currency)</del>-<del class="diffchange diffchange-inline">denominated </del>bond issued <del class="diffchange diffchange-inline">in Tokyo by </del>a <del class="diffchange diffchange-inline">non</del>-<del class="diffchange diffchange-inline">Japanese company and subject to Japanese regulations</del>.</div></td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div>Masala <ins class="diffchange diffchange-inline">bonds </ins>are <ins class="diffchange diffchange-inline">the first rupee bonds listed on the </ins>[http://www.<ins class="diffchange diffchange-inline">londonstockexchange</ins>.com/<ins class="diffchange diffchange-inline">home</ins>/<ins class="diffchange diffchange-inline">homepage</ins>.<ins class="diffchange diffchange-inline">htm London Stock Exchange</ins>]. <ins class="diffchange diffchange-inline"> They </ins>are <ins class="diffchange diffchange-inline">the longest-dated </ins>bonds <ins class="diffchange diffchange-inline">in the offshore rupee markets, building on earlier offshore rupee issuances by IFC at three</ins>-<ins class="diffchange diffchange-inline">, five-, and seven-year maturities. However, these earlier </ins>bond <ins class="diffchange diffchange-inline">issuances were not </ins>issued <ins class="diffchange diffchange-inline">under the nomenclature of masala bonds. Further, as on date, the present issue of masala bonds is </ins>a <ins class="diffchange diffchange-inline">one</ins>-<ins class="diffchange diffchange-inline">time issue</ins>. <ins class="diffchange diffchange-inline">Hence, subsequent issuances of the off shore rupee bonds by IFC may also not be under this nomenclature.</ins></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins class="diffchange diffchange-inline">'''Advantages and Disadvantages''' </ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>Offshore bonds have its own set of advantages and disadvantages for both the issuer and the investor as well as for the economy. Competition from offshore markets may induce improvements in domestic bonds markets such as strengthening of domestic market infrastructure, improving investor protection and removing tax distortions that hinder domestic market development etc. Against these benefits come the risks associated with financial openness and sudden shifts in capital flows, and the risk that offshore markets may draw liquidity away from the domestic market.</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>Offshore bonds have its own set of advantages and disadvantages for both the issuer and the investor as well as for the economy. Competition from offshore markets may induce improvements in domestic bonds markets such as strengthening of domestic market infrastructure, improving investor protection and removing tax distortions that hinder domestic market development etc. Against these benefits come the risks associated with financial openness and sudden shifts in capital flows, and the risk that offshore markets may draw liquidity away from the domestic market.</div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">'''RBI Framework for issuance of rupee denominated bonds overseas'''</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">As per the [https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=10049 September 2015] and the [https://rbi.org.in/scripts/NotificationUser.aspx?Id=10350&Mode=0 April 2016] guidelines of RBI, any corporate or [http://www.arthapedia.in/index.php?title=Body_Corporate body corporate] as well as [http://www.arthapedia.in/index.php?title=Real_Estate_Investment_Trusts_(REITs) Real Estate Investment Trusts (REITs)] and [http://www.arthapedia.in/index.php?title=Infrastructure_Investment_Trust_(InvITs) Infrastructure Investment Trusts (InvITs)] can issue such off-shore rupee denominated bonds. They can issue only plain vanilla bonds and the issue has to be either placed privately or listed on exchanges as per host country regulations.</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">The Rupee denominated bonds can only be issued in a country and can only be subscribed by a resident of a country: </ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*that is a member of Financial Action Task Force (FATF) or a member of a FATF- Style Regional Body; and</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*whose securities market regulator is a signatory to the International Organization of Securities Commission's (IOSCO’s) Multilateral Memorandum of Understanding or a signatory to bilateral Memorandum of Understanding with the Securities and Exchange Board of India (SEBI) for information sharing arrangements; and</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*should not be a country identified in the public statement of the FATF as</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">(i) A jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; or</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">(ii) A jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">Banks incorporated in India will not have access to these bonds in any manner whatsoever. Indian banks, however, can act as arranger and underwriter. In case of underwriting, holding of Indian banks cannot be more than 5 per cent of the issue size after 6 months of issue. Further, such holding shall be subject to applicable prudential norms.</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">The minimum maturity period is 3 years, (till April 2016 it was 5 years). The call and put option (the right to buy/sell at a future point of time), if any, cannot be exercisable prior to completion of minimum maturity.</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">The proceeds can be used for ''all'' purposes '''except''' for the following: </ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*I. Real estate activities other than for development of integrated township / affordable housing projects; </ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*ii. Investing in capital market and using the proceeds for equity investment domestically; </ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*iii. Activities prohibited as per the foreign direct investment (FDI) guidelines; </ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*iv. On-lending to other entities for any of the above objectives; and </ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*v.Purchase of land.</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">Companies can raise under the automatic route (i.e., without prior approval) an amount equivalent to USD 50 billion (till April 2016 it was USD 750 million) per annum. Cases beyond this limit would require prior approval of the Reserve Bank. The issuance of Rupee denominated bonds overseas will be within the aggregate limit of foreign investment permitted in corporate debt as notified from time to time.</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;"></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">The foreign currency - Rupee conversion will be at the market rate on the date of settlement for the purpose of transactions undertaken for issue and servicing of the bonds.</ins></div></td></tr>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>#[http://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/7F73CD8D63543DBE85257D8C00656247?opendocument IFC Issues First Masala Bonds in London, Attracting International Investment for Infrastructure in India,] Press release, IFC dated 10 November 2014</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>#[http://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/7F73CD8D63543DBE85257D8C00656247?opendocument IFC Issues First Masala Bonds in London, Attracting International Investment for Infrastructure in India,] Press release, IFC dated 10 November 2014</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>#[http://www.bis.org/publ/work334.pdf Why issue bonds offshore?] by Susan Black and Anella Munro, BIS Working Papers, No 334</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>#[http://www.bis.org/publ/work334.pdf Why issue bonds offshore?] by Susan Black and Anella Munro, BIS Working Papers, No 334</div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">#[https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=10049 September 2015] and the [https://rbi.org.in/scripts/NotificationUser.aspx?Id=10350&Mode=0 April 2016] guidelines of RBI</ins></div></td></tr>
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</table>Rosemary.ahttp://arthapedia.in/index.php?title=Masala_Bonds&diff=3441&oldid=prevArthapedia: /* Contributed by */2016-04-19T11:14:23Z<p><span class="autocomment">Contributed by</span></p>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>==Contributed by==</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>==Contributed by==</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="background: #ffa; color:black; font-size: smaller;"><div>* [http://www.ies.gov.in/myaccount-profile-view.php?memid=338 Rosemary Abraham, IES(2006)]</div></td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div>* [http://www.ies.gov.in/myaccount-profile-view.php?memid=338 Rosemary <ins class="diffchange diffchange-inline">K. </ins>Abraham, IES(2006)]</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>*Email- [mailto:rosemary.a@nic.in rosemary.a@nic.in]</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>*Email- [mailto:rosemary.a@nic.in rosemary.a@nic.in]</div></td></tr>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>[[Category:concepts|MasalaBonds]]</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>[[Category:concepts|MasalaBonds]]</div></td></tr>
</table>Arthapediahttp://arthapedia.in/index.php?title=Masala_Bonds&diff=2313&oldid=prevArthapedia: /* Contributed by */2015-07-23T11:33:46Z<p><span class="autocomment">Contributed by</span></p>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>*Email- [mailto:rosemary.a@nic.in rosemary.a@nic.in]</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>*Email- [mailto:rosemary.a@nic.in rosemary.a@nic.in]</div></td></tr>
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<tr><td class='diff-marker'>−</td><td style="background: #ffa; color:black; font-size: smaller;"><div>[[Category:concepts|<del class="diffchange diffchange-inline">Masala Bonds</del>]]</div></td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div>[[Category:concepts|<ins class="diffchange diffchange-inline">MasalaBonds</ins>]]</div></td></tr>
</table>Arthapediahttp://arthapedia.in/index.php?title=Masala_Bonds&diff=1981&oldid=prevArthapedia: /* Contributed by */2015-04-08T09:56:10Z<p><span class="autocomment">Contributed by</span></p>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>==Contributed by==</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>==Contributed by==</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>* [http://www.ies.gov.in/myaccount-profile-view.php?memid=338 Rosemary Abraham, IES(2006)]</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>* [http://www.ies.gov.in/myaccount-profile-view.php?memid=338 Rosemary Abraham, IES(2006)]</div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*Email- [mailto:rosemary.a@nic.in rosemary.a@nic.in]</ins></div></td></tr>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>[[Category:concepts|Masala Bonds]]</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>[[Category:concepts|Masala Bonds]]</div></td></tr>
</table>Arthapediahttp://arthapedia.in/index.php?title=Masala_Bonds&diff=1550&oldid=prevArthapedia: Created page with ""Masala Bonds" are the 10 year [http://www.investopedia.com/terms/o/offshore.asp off-shore] rupee bonds issued by [http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_externa..."2014-11-18T05:13:07Z<p>Created page with ""Masala Bonds" are the 10 year [http://www.investopedia.com/terms/o/offshore.asp off-shore] rupee bonds issued by [http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_externa..."</p>
<p><b>New concept</b></p><div>"Masala Bonds" are the 10 year [http://www.investopedia.com/terms/o/offshore.asp off-shore] rupee bonds issued by [http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc International Finance Corporation (IFC)], a member of the World Bank group, in the international capital market in November 2014, to raise funds for supporting private sector infrastructure development initiatives in India. Masala bonds are listed in [http://www.londonstockexchange.com/home/homepage.htm London Stock Exchange].<br />
<br />
Masala bonds, like any other off-shore bonds, are intended for those foreign investors who want to take exposure to Indian assets, yet constrained from doing it directly in the Indian market or prefer to do so from their offshore locations. The settlement of the bonds will be in US dollars but since they are pegged to the Indian currency -rupee-, investors will directly take the currency risk or exchange rate risks. Settlement is done in US dollars because of the limited [http://www.investopedia.com/terms/c/convertibility.asp convertibility] of rupee. <br />
<br />
The term "masala" stands for Indian spices, which gives Indian cuisine its characteristic flavour, and helped India gain a place in the global trade map. IFC, established in 1956 and owned by 184 member countries, is the largest global development institution focused exclusively on the private sector companies and financial institutions in developing countries. <br />
<br />
Masala bonds were issued on 10 November 2014 under IFC’s $2 billion offshore rupee program and yields 6.3%. IFC issued the bonds in London, a premier financial center and the investment banker, J.P. Morgan was the sole arranger for the bond. The vast majority of investors in masala bonds are European insurance companies. Proceeds from this 10-year, 10 billion Indian rupee bond (equivalent to $163 million) will be used to support a forthcoming infrastructure bond issuance by [http://www.axisbank.com/ Axis Bank], back in India. Thus, Masala bonds pave the way for more foreign investment to help meet India’s private sector development needs.<br />
<br />
Masala bonds are the first rupee bonds listed on the [http://www.londonstockexchange.com/home/homepage.htm London Stock Exchange]. They are the longest-dated bonds in the offshore rupee markets, building on earlier offshore rupee issuances by IFC at three-, five-, and seven-year maturities. However, these earlier bond issuances were not issued under the nomenclature of masala bonds. As on date, the present issue of masala bonds is a one-time issue. Hence, subsequent issuances of the off shore rupee bonds by IFC may also not be under this nomenclature.<br />
<br />
Yet by usage of the term, Masala Bonds are similar to [http://www.investopedia.com/terms/d/dim-sum-bond.asp dimsum bonds] -bonds issued outside China but denominated in Chinese currency. But they are different from [http://en.wikipedia.org/wiki/Samurai_bond samurai bonds] which are Yen (Japanese currency)-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.<br />
<br />
Offshore bonds have its own set of advantages and disadvantages for both the issuer and the investor as well as for the economy. Competition from offshore markets may induce improvements in domestic bonds markets such as strengthening of domestic market infrastructure, improving investor protection and removing tax distortions that hinder domestic market development etc. Against these benefits come the risks associated with financial openness and sudden shifts in capital flows, and the risk that offshore markets may draw liquidity away from the domestic market.<br />
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==References==<br />
#[http://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/7F73CD8D63543DBE85257D8C00656247?opendocument IFC Issues First Masala Bonds in London, Attracting International Investment for Infrastructure in India,] Press release, IFC dated 10 November 2014<br />
#[http://www.bis.org/publ/work334.pdf Why issue bonds offshore?] by Susan Black and Anella Munro, BIS Working Papers, No 334<br />
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==Contributed by==<br />
* [http://www.ies.gov.in/myaccount-profile-view.php?memid=338 Rosemary Abraham, IES(2006)]<br />
<br />
[[Category:concepts|Masala Bonds]]</div>Arthapedia