What are Masala bonds?

Masala Bonds are debt instruments issued in the overseas market, as rupee-denominated bonds. The main purpose of these bonds is to finance infrastructure projects, spur domestic growth via borrowing, and internationalise the Indian rupee. They help both government and private entities raise money in local currency from foreign investors. Investors from countries that are members of Financial Action Task Force can subscribe to these bonds. As per RBI, if these bonds are to raise up to the rupee equivalent of $50 million in the fiscal year, then the minimum maturity is 3 years; if they are meant to raise more than that, then the minimum maturity is 5 years.