Now banks can raise funds overseas through "Masala Bonds"

The Reserve Bank has now allowed banks to raise funds by floating Masala Bonds or Rupee-Denominated Bonds in overseas market as part of an additional avenue to raise long-term funds.

Masala bonds are bonds issued outside India but denominated in Indian Rupees, rather than the local currency.

“In line with the announcement made, with a view to developing the market of rupee-denominated bonds overseas, it has been decided, after consultation with the government, to allow Indian banks within the limit set for foreign investment in corporate bonds (Rs 2,44,323 crore at present) to issue bonds,” RBI said in a notification.