- Kerala chief minister Pinarayi Vijayan becomes first Chief Minister of India to ring the bell at the London Stock Exchange to mark the listing on May 17, 2019 of the Rs. 2,150 crore of masala bonds sold by Kerala Infrastructure Investment Fund Board (KIFFB).
- Kerala is the first state to issue masala bonds, which it says would mark a new page in the state’s development. If it is successful, many debt-ridden states are likely to follow suit.
- A brainchild of state finance minister Thomas Issac, who is also an economist, the government thinks it can attract funds and rebuild infrastructure in Kerala, which was devastated by last year’s floods.
- The tiny Masala debt market has been struggling since its emergence four years ago.
- KIIFB is the first sub-sovereign entity in the country to tap into the offshore rupee international bond market.
About Masala Bond
- Masala Bonds are rupee-denominated borrowings issued by Indian entities in overseas markets.
- Masala means spices and the term was used by International Finance Corporation (IFC) to popularise the culture and cuisine of India on foreign platforms.
- The objective of Masala Bonds is to fund infrastructure projects in India, fuel internal growth via borrowings and internationalise the Indian currency.
- The RBI allowed issuance of these bonds by Indian corporates as part of its fourth bi-monthly policy statement for the year 2015-16 on September 29, 2015.
- The bonds are directly pegged to the Indian currency. So, investors will directly take the currency risk or exchange rate risks.
