RBI allows multilateral agencies to invest in masala bonds

MUMBAI: Reserve Bank of India ( RBI) has allowed multilateral and regional financial institutions to invest in rupee denominated bonds listed abroad popularly known as masala bonds.

In a notification on its website, RBI said these new class of investors will given a wider choice for Indian issuers abroad.

"In order to provide more choices of investors to Indian entities issuing rupee denominated bonds abroad, it has been decided to also permit multilateral and regional financial institutions where India is a member country, to invest in these rupee denominated bonds," RBI said.

As a result, agencies like the Asian Development Bank and the BRICS led New Development Bank can also invest in these bonds.

Since September this year from when these bonds were allowed Indian firms have together raised $1.71 billion by selling these so called masala bond which are mostly listed in London.