ADB Lists Masala Bonds On India INX

  • On 25th February, 2022, Asian Development Bank (ADB) listed its 10-year Masala Bonds worth Rs 850 crore on the Global Securities Market (GSM) of the India International Exchange (INX) at GIFT City, Gujarat.
  • The proceeds would be used to support local currency lending and investment in India.

Key Points

  • GSM, the primary market platform of India INX, has evoked significant interest since its establishment in 2018 and has more than $48 billion medium-term notes established and over $21 billion of bond listings till date.
  • ADB’s Masala Bonds are listed on both Luxembourg exchange and India INX.
  • The listing rules and processes at India INX are modelled on global standards making time to market fast and efficient.
  • Bonds were distributed to investors in the US (21 per cent) and Europe (79 per cent), with 28 per cent placed with banks and 72 per cent with fund managers.

India International Exchange Limited (India INX)

  • INX is India’s first international exchange in International Financial Services Centre (IFSC) located at the Gujarat International Finance-Tec City (GIFT City).
  • India INX is a subsidiary of Bombay Stock Exchange (BSE) Limited.
  • Operating on an advanced technology platform of EUREX T7, the Exchange is the fastest in the world with a turn-around time of 4 micro seconds.
  • The exchange offers a first of its kind single segment approach for all asset classes - equities, currencies, commodities, fixed income securities providing significant cost advantages to participants.


  • This is the first time a foreign issuer and a supranational is doing a primary listing with India INX. This will help further in making GIFT IFSC a global hub for fund raising by Indian and Foreign issuers.

What are Masala Bonds?

  • Masala Bonds are the bonds which are issued by the Indian firms (in rupee denomination) to foreign investors with an aim to attract funds for projects.
  • Since these bonds are issued outside of India, they are settled in US dollars (USD) in markets.
  • The term was used by International Finance Corporation (IFC) to popularise the culture and cuisine of India on foreign platforms.
  • The first Masala Bond was issued by IFC in November 2014 when it raised 1,000 crore bonds to fund infrastructure projects in India.
  • The framework for issuance of these bonds falls within the External Commercial Borrowings (ECB) policy.

Who Issues these Bonds?

  • Any corporate or body corporate, Indian banks, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are eligible to issue these denominated bonds overseas.
  • Resident entities like Limited Liability Partnerships and Partnership firms are, however, not eligible to issue these bonds.

Where can these bonds be issued and who can subscribe?

  • Masala Bonds can be issued only in countries that have an arrangement for Financial Action Task Force (FATF) or are a member of a FATF-Style Regional body along with securities market regulator is a signatory to the International Organization of Securities Commission's (IOSCO’s) or a signatory to bilateral MoU with the SEBI for information sharing arrangements.
  • While residents of such countries can subscribe to the bonds, it can also be subscribed by multilateral and regional financial institutions where India is a member country.

Who is eligible to invest in these Bonds?

  • Investors from outside of India who would like to invest in Indian assets can invest in Masala Bonds.
  • Indian entities like HDFC, NTPC, and Indiabulls Housing have raised funds via Masala Bonds.

What is the minimum maturity period of such bonds?

  • According to RBI, the minimum maturity period for Masala Bonds raised up to Rupee equivalent of USD 50 million in a financial year should be 3 years and for bonds raised above USD 50 million equivalent in INR per financial year should be 5 years.
  • The conversion for such bonds happens at the market rate on the date of settlement of transactions undertaken for issue and servicing of the bonds, including its redemption.

What are the benefits of Masala Bonds?

Benefits to Economy

  • Masala Bonds help to internationalize the Indian Rupee and give value to the Indian Financial system and economy
  • Liquid rupee-denominated debt markets stimulate financial stability.
  • It helped to open up new avenues for Bond investments by retail savers by increasing their rupee structure.
  • These bonds help in building up foreign investor’s confidence in Indian economy and currency which will strengthen the foreign investments in the country.

Benefits to the Issuer

  • The issuer of these bonds is shielded against the risk of currency fluctuation, typically associated with borrowing in foreign currency. In simpler words, as Masala Bonds are rupee-denominated bonds, the risk goes directly to the investor.

Benefits to the Investors

  • Investor can earn more money as interest rate of Masala Bond is higher compared to developed countries.