Answer-A SEBI-registered Infrastructure Investment Trust (InvIT) plans to raise funds by issuing Masal...

Masala Bonds are rupee-denominated bonds issued in offshore markets. In addition to corporates, SEBI-regulated REITs and InvITs are specifically permitted to issue these bonds. Because they are settled in foreign currency but denominated in INR, the investor bears the risk of rupee depreciation. As per the RBIs Master Direction on ECB, the minimum original maturity is 3 years for issuances up to USD 50 million equivalent per financial year and 5 years for issuances exceeding that amount.

Question

A SEBI-registered Infrastructure Investment Trust (InvI

T plans to raise funds by issuing Masala Bonds in the London market. Which of the following regulatory combinations correctly identifies the currency risk-bearer and the minimum maturity requirements for this issuance in 2026?

A The issuer bears the currency risk; Minimum maturity is 3 years for all issue sizes.

B The investor bears the currency risk; Minimum maturity is 3 years for issues up to USD 50 million equivalent and 5 years for larger issues.

C The investor bears the currency risk; Minimum maturity is 5 years irrespective of the issue size.

D The issuer bears the currency risk; Minimum maturity is 7 years for infrastructure projects.

E The RBI bears the currency risk; Minimum maturity is aligned with standard 10-year G-Secs.

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