Masala Bonds Update: Significant Amendments Introduced

The framework governing Masala Bonds has been consolidated under the Master Direction No.5 dated 1 January 2016 on 'External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers', as amended from time to time (ECB Master Direction) and is covered in a separate section within the ECB Master Direction, distinguishing such bonds from the general norms applicable to ECBs regarding available routes of borrowing, eligible borrower, eligible investors, all-in-cost ceilings, maturity prescriptions, end use restrictions etc. With a view to further harmonising the legal framework for rupee denominated bonds issued overseas (or Masala Bonds) with the various elements of the ECB regime, the RBI issued a circular on 7 June 2017 amending certain important aspects governing issuance of Masala Bonds (June 2017 Circular).