New Development Bank to raise $500 mn in rupee-denominated masala bonds

31 Mar 2017


The New Development Bank (NDB) set up by the BRICS group of major emerging economies plans to raise up to $500 million via rupee-denominated masala bonds in the second half of the year, the bank's president, KV Kamath, said on Thursday.

NDB, jointly set up by Brazil, Russia, India, China and South Africa in July 2014 and officially launched a year later, aims at infrastructure funding in BRICS and other emerging economies.

The bank had sold three billion in yuan-denominated green bonds ($435.5 million) in China's interbank market last year for raising funds to support clean and renewable energy use.

''We would be ready with the masala bond in local currency in the second half,'' Kamath told Reuters in an interview in New Delhi. ''Thereafter, in sequence, we will look at the other markets as opportunities open up.''

Masala bonds are issued outside India but denominated in Indian rupees.

Headquartered in Shanghai, the New Development Bank was seen as the first major achievement of the BRICS countries since their grouping in 2009 and a counter to the global financial institutions dominated by Western powers.

However, the establishment of the China-led Asian Infrastructure Investment Bank (AIIB) has raised questions about the New Development Bank's relevance, with some commentators casting doubts about Beijing's commitment to the lender.

Kamath played down those concerns, saying the bank was growing as per its schedule.

''We feel most welcome in our host country. We have received the utmost support from China in getting where we are,'' he said.

''We are growing at the utmost speed that is possible... We are not finding any constraint.''

The bank, which was founded with an initial authorised capital of $100 billion, started lending last year, funding seven projects worth $1.5 billion.

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