THE World Bank’s private sector investment arm on Thursday (October 10) said it has launched a $1bn (£626m) bond program to fund Indian private sector projects as the country struggles to lure foreign investment.
IFC, a member of the World Bank group, said in a statement emailed to a reporter that the bond program was the largest of its kind in the offshore rupee market.
Under the program, IFC will issue rupee-linked bonds and use the proceeds to finance private sector investment in the country.
“Vibrant domestic capital markets ensure access to long-term, local-currency finance for the private sector – the key engine of job creation in emerging markets,” said Jin-Yong Cai, IFC’s chief executive.
The bonds would offer Indian interest rates which are significantly higher than rates in many other parts of the globe and also enjoy a top credit rating.
India has been seeking to attract foreign investment to help partners’ private sector projects but has been struggling in the face of the slowest economic growth in a decade, corruption problems and political uncertainty.
“IFC’s offshore bond program will help bring depth and diversity to the offshore rupee market and pave the way for an alternative source of funding for Indian companies,” the IFC chief added.
India accounted for $4.5bn (£2.81bn) of IFC’s committed investment portfolio as of early June – more than any other country.
Arvind Mayaram, a senior official at India’s Ministry of Finance, called IFC an important development partner for Asia’s third-largest economy.
“It has been contributing significantly in financing private sector projects, including public-private partnerships, in several key developmental areas,” he said in the IFC statement.
The finance ministry official said the bond would help deepen the still maturing capital markets in India and establish an Indian rupee benchmark in global bond markets.
Over the years, IFC has issued bonds in 13 local currencies, including the Brazilian real, the Chinese renminbi, the Nigeria naira, and the Russia ruble.
