With reference to ‘IFC Masala Bonds’, sometimes seen in the news, which of the statements given below is/are correct?
- 1. The International Finance Corpora- tion, which offers these bonds, is an arm of the World Bank.
- 2. They are the rupee-denominated bonds and are a source of debt financing for the public and private sector.
Select the correct answer using the code given below.
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC IAS – 2016
1. **The International Finance Corporation, which offers these bonds, is an arm of the World Bank:** The World Bank Group is a family of five international organizations. The International Finance Corporation (IFC) is one of these five organizations, specifically focused on private sector development in developing countries. This statement is correct. IFC was one of the first entities to issue rupee-denominated bonds in the international market, labeling them “Masala Bonds”.
2. **They are the rupee-denominated bonds and are a source of debt financing for the public and private sector:** Masala Bonds are debt instruments denominated in Indian Rupees (INR) but issued in overseas capital markets. This allows Indian entities (both public and private sector) or multilateral agencies like IFC to raise funds from international investors in INR, thereby transferring the currency risk from the Indian issuer to the overseas investor. This statement is correct.