UPSC Previous Year Question | Prelims GS | 2016

With reference to 'IFC Masala Bonds', sometimes seen in the news, which of the statements given below is/are correct? 1. The International Finance Corporation, which offers these bonds, is an arm of the World Bank. 2. They are rupee-denominated bonds and are a source of debt financing for the public and private sector. Select the correct answer using the code given below.

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer

Correct Answer

1 only

Explanation

The International Finance Corporation (IFC) is part of the World Bank Group, so statement 1 is correct. Masala Bonds issued by the IFC are dollar-denominated bonds issued outside India but settled in local currency terms tied to the rupee, not simply 'rupee-denominated' as stated, making statement 2 as framed incorrect per the official key.

Topics: banking and finance, bonds and debt instruments, indian economy, masala bonds