Which of the following is not a correct statement with respect to Masala Bonds?
[A] They allow Indian companies to raise overseas debts in Indian currency [B] Interest Payment on Masala Bonds is in Indian Rupee [C] Most popular market for Masala Bonds is New York currently [D] All of the above are correct statements
Correct Answer: C [Most popular market for Masala Bonds is New York currently]
Notes: Masala bonds allow Indian companies to raise overseas debt in the Indian currency. The instrument shields the issuers from currency fluctuations mainly because interest payments and redemption is in rupees. At the same time, investors get interest rates that are higher than in their domestic markets. In third statement, the most popular market for Masala bonds currently is London.