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      Question

      The debt instruments that allow Indian companies to

      raise money in local currency (INR) from foreign investors are called ______.
      A Masala Bonds Correct Answer Incorrect Answer
      B FCCB (Foreign Currency Convertible Bonds) Correct Answer Incorrect Answer
      C FCEB (Foreign Currency Exchangeable Bonds) Correct Answer Incorrect Answer
      D Foreign Bonds Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      Masala Bonds are rupee-denominated bonds issued by Indian entities in overseas markets. • Unlike FCCBs or FCEBs (which are denominated in foreign currencies), Masala Bonds are issued in Indian rupees. • Both the coupon payments (interest) and the principal repayment are made in INR. • Since they are denominated in rupees, the currency risk is borne by the foreign investors, not the issuing Indian company. This instrument enables Indian companies to access global capital while protecting themselves from exchange rate fluctuations.

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