The Reserve Bank of India (RBI) mooted the idea of permitting an Indian corporate to issue rupee bonds in overseas centres in its first bi-monthly policy statement dated April 7, 2015 for this financial year. On September 29, 2015, the RBI finally issued a circular permitting the issuance of rupee denominated bonds overseas (Circular). International financial institutions like the International Finance Corporation and the Asian Development Bank had earlier been granted specific permission to issue rupee denominated bonds in overseas markets or ‘masala bonds’ as they are now famously known. The Circular introduced the concept of issuance of rupee denominated bonds overseas (RDBs) within the overarching external commercial borrowing policy (ECB Policy), thereby opening a new avenue of funding for Indian entities. The added benefit to Indian entities in relation to such a form of funding would be that their currency risk to the issuer / borrower would be obviated which would possibly bring down the costs as well.
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