Question

    Masala Bonds-

    A Are mix of long term and short term debt securities that offers benefit of both Correct Answer Incorrect Answer
    B Are used by Indian traders for supporting export of spices from India Correct Answer Incorrect Answer
    C Are the hybrid instruments of dollar and rupee denominated securities Correct Answer Incorrect Answer
    D Are bonds issued outside India but denominated in Indian Rupees, rather than in the local currency Correct Answer Incorrect Answer
    E combine both debt and equity characteristics Correct Answer Incorrect Answer

    Solution

    Masala means spices. Unlike dollar bonds, in which the borrower takes the currency risk, Masala bond makes the investors bear the risk. The first Masala bond was issued by the World Bank backed International Finance Corporation in 2014 when it raised 1,000 cr to fund infrastructure projects in India.

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