The International Finance Corporation (IFC), the commercial funding arm of the World Bank Group, on Wednesday announced the launch of a $1 billion offshore rupee bond programme, which, it said, would help strengthen India's capital markets and attract greater foreign investment.
Under the programme - the largest of its kind in the offshore rupee market - IFC will issue rupee-linked bonds and use the proceeds to finance private sector investment in the country.
IFC said the country's vibrant capital market will ensure access to long-term, local-currency finance for the private sector - the key engine of job creation in emerging markets.
''IFC's offshore bond programme will help bring depth and diversity to the offshore rupee market and pave the way for an alternative source of funding for Indian companies,'' said Jin-Yong Cai, IFC's CEO.
''This is a new initiative for the intermediation of international savings for development in India. It will also help deepen the capital markets in India and establish an Indian rupee benchmark in the global markets,'' said Arvind Mayaram, secretary of economic affairs in the union finance ministry.
India accounted for $4.5 billion of IFC's committed investment portfolio as of 30 June 2013 - more than any other country.
In FY13, IFC invested $1.38 billion in India to achieve several strategic priorities such as promoting inclusive growth in India's low-income states, addressing climate change, and supporting global economic integration.
Over the years, IFC has issued bonds in 13 local currencies, including the Brazilian real, the Chinese renminbi, the Nigeria naira, and the Russian rouble.
IFC has provided over $10 billion in local-currency financing across 58 currencies using a variety of financing tools-more than any other international finance institution.
IFC is also the first international or corporate issuer of local-currency bonds in a market.