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

Bank PO V/S Bank SO - What to choose?

Written by - Competition Zenith Dear Readers, As many of you have cleared Bank PO and Bank So as well or going to write both the exams next time. We must congratulate you in clearing two of the most elite bank exams in India. We know that it must be a matter of great confusion and concern that which job is good for you. So we have made a detailed analysis of both the jobs for you. with their pro and cons. It is now up to you to decide. Happy reading. Probationary Officer (PO)/Management Trainee (MT) A Probationary officer (PO) or a Management Trainee (MT) is the first level to enter the banking world. He or she reports to immediate seniors who evaluate his performance in the tasks assigned to him. Initially, a Probationary Officer can be assigned any work from a wide gamut of ongoing banking activities. Normally the probation period is of two years in which the officer is exposed to different types of banking related works. In some banks, the duration may be limi...

Rules Regarding OBC and Creamy Layer Certificates in SSC Exams

1. OBC certificate is valid for as long as the community is notified as OBC certificate treated valid by SSC for 3 years. 2 .It is necessary for everyone to get the OBC certificate renewed after every three years for SSC exams as creamy layer status may change if a person remains in creamy layer for 3 years continuously.

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....

Competition ZENITH

Search This Blog