Why in the news?

• The Enforcement Directorate issued a notice to Kerala CM as a part of the KIIFB Masala Bond investigation.

Masala Bond

• What is it?: These are the Rupee-denominated bonds issued outside India by Indian entities.
• Features:
  • They are debt instruments that allow raising money in local currency (INR) from foreign investors.
  • Currency risk lies with the investor, not the issuer- Protecting domestic companies from exchange-rate volatility.
  • Bonds generally offer attractive interest rates to compensate investors for exchange-rate risk.
  • Both government and private entities can issue Masala Bonds.
• Who can Invest:
  • Investors outside India who are interested in Indian assets.
  • Any resident of a country that is a Financial Action Task Force (FATF) member can subscribe.
  • Also open to multilateral and regional financial institutions of which India is a member.
  • Eligible investors include Individuals, Institutions as well as Financial organisations following international standards.
• Permitted and Restricted Uses:

Source: The Hindu