Masala bond curbs unlikely to be disruptive

Indian companies raised Rs 33,165 crore through the masala bonds route till April

The Reserve Bank of India’s (RBI’s) recent move to align rupee-denominated bonds issuance in line with external commercial borrowing (ECB) will unlikely hamper the growth of the market, but can curtail the ability of low-rated companies to raise funds using the instrument.

The central bank on June 7 said any company raising rupee-denominated bonds of over $50 million equivalent should issue those for a minimum maturity of five years. Also, the all-in cost of these bonds should be 300 basis points over the equivalent-maturity government bonds. According to RBI data, Indian companies raised Rs 33,165 crore through the masala bonds