Masala Bonds

Masala Bonds are Indian Rupee-denominated bonds issued by Indian entities in overseas markets to foreign investors. The name reflects the flavour of India, coined when the International Finance Corporation (IFC) issued the first such bond in 2013. Unlike foreign currency bonds (where the issuer bears currency risk), Masala Bonds transfer the currency risk to the overseas investor—if the Rupee depreciates, the investor receives fewer Dollars when converting interest and principal back. Indian companies, banks, and infrastructure entities use Masala Bonds to access international capital markets while avoiding foreign exchange exposure on their own books. They are listed on overseas exchanges like the London Stock Exchange.