In recent times, a number of Indian firms are gearing up to raise funds from issuing what are known as "masala bonds". Which of the following statements is/are correct about masala bonds?

  1. Masala bonds are capital market instruments.
  2. Masala bonds are rupee-denominated bonds.
  3. Registration with SEBI is not compulsory to purchase masala bonds.

Select the correct option from codes given below:

Answer: [D] 1, 2 & 3

Masala bonds are capital market debt instrument, which allow Indian corporates to raise money from overseas investors. Furthermore, any capital gains arising in case of appreciation of rupee between the date of issue and the date of redemption against the foreign currency in which the investment is made would be exempt from capital gains tax. No registration as FII with SEBI is required for investment in masala bonds.

This question is a part of GKToday's Integrated IAS General Studies Module