The Reserve Bank of India (RBI) changed the rules pertaining to the calculation of the foreign investment limit in so-called masala bonds, potentially opening up space for Indian companies to sell more such securities. Starting 3 October, masala bonds, or rupee-denominated bonds sold overseas, will not be part of the investment limit for foreign portfolio investors (FPIs) in corporate bonds and will instead be included under external commercial borrowings (ECB), the RBI notification stated. Such a shift will allow companies to issue masala bonds as they are currently barred by Sebi (Securities and Exchange Board of India). This will also lead to better monitoring of issuances by RBI as the external commercial borrowings framework is restrictive in terms of end-use of funds.

(Live Mint)