Skip to main content

Masala Bonds - New way of raising money

What are bonds?

Bonds are instruments of debt - typically used by corporates to raise money from investors.

Difficulties giving birth to Masala Bonds?

Previously Indian companies had to rely on external commercial borrowings or ECBs to raise money from overseas investors. The challenge with ECBs is the entity raising money is faced with a currency risk - they have to be raised and repaid in dollar terms. So if till the time of repayment the conversion value of Rupee to Dollar down further then the Indian company has to larger Rupee to repay the pre determined Dollar value.
What are masala bonds?
With a masala bond, a corporate could issue Rs. 10 billion worth of bonds with the promise of paying back Rs. 11 billion in one year. But as the Indian rupee has limited convertibility, the investors will lend the dollar equivalent of the Rs. 10 billion. After one year, the Indian corporate needs to pay back the dollar equivalent of Rs. 11 billion. The currency risk is with the investor.

The Reserve Bank of India has issued guidelines allowing Indian companies, non-banking finance companies (HDFC, India Bulls Housing Finance are examples of such companies) and infrastructure investment trusts and real investment trusts (investment vehicles that pool money from various investors and invest in infrastructure and real estate sectors) to issue rupee-denominated bond overseas.

Comments

Popular posts from this blog

Spotting Error Quiz IV - With Explanation For SSC Exam 2015

  Hello Readers, As you know that Spotting Error types question is an important part of competitive examinations and seldom any book provide you the detailed solution. So we have decided to provide you the previous year questions of  spotting error along with the Explanation . If you like it let us know, you can also ask for detailed solutions of questions that are bothering you. 1.     I found (a)/ the two first chapters of the book (b)/ particularly interesting. (c)/ No error (d) Answer    (b) Explanation : It should be   ‘the first two chapters’ . 2.     Bacon, the father of the English easy (a) / had a thirst (b) / of knowledge (c) / No error (d) Answer    (a) Explanation : The English means the citizen of England.   Article is not used before language

English Error Spotting - Previous Year Questions of SSC CGL

Competition Zenith brings you a post on Error Spotting to boost your English for competitive exams. We are providing you the specifically chosen questions from previous year papers of SSC CGL with the best possible explanation in simplest of the language. Below are some questions with explanation: Questions 1. Have trust on(a)/God and everything(b) /will be right.(c) /(d) No error 2. The cattles (a) /are grazing (b) /in the fields.(c) /(d) No error 3. He is one of (a)/ the best novelists (b) /that has ever lived. Do you agree? (c)/no error (d) 4. On a rainy day (a) /I enjoy to watch TV (b) / with a hot cup of tea.(c ) /no error(d) 5. No sooner did (a)/I reach (b)/ Patna railway station than the train departed(c)/no error (d) 6. There is no agreement (a) / between you and I (b) /so we are free to go our way(c) /no error (d) 7. A variety of books (a) / is available in the market (b) / to help the students qualify the competitive examinations.(c) /no error 8.

Easy way to understand Direct and Indirect speech rules

Introduction. There two ways to convey a message of a person, or the words spoken by a person to other person. 1.       Direct speech 2.       Indirect speech Suppose your friend whose name is Vipul tells you in College , “I will give you a pen”. You come to home and you want to tell your brother what your friend told you. There are two ways to tell him. Direct speech:   Vipul said, “I will give you a pen”. Indirect Speech:  Vipul said that he would give me a pen. In direct speech   the original words of person are narrated (no change is made) and are enclosed in quotation mark. While in indirect speech some changes are made in original words of the person because these words have been spoken in past so the tense will change accordingly and pronoun may also be changed accordingly. In indirect speech  the statement of the person is not enclosed in quotation marks, the word “ that ” may be used before the statement to show that it is indirect sp