In 2004, ADB had raised funds by floating Rs 4 billion (Rs 400 crore) onshore rupee denominated bonds. Asked about the quantum of rupee bonds, he said, it is at a very initial stage. ADB is yet to take a call on when to issue and when to issue.

The funds that would be raised are expected to go to private sector projects, Rao said. Earlier this month, the World Bank group member International Finance Corporation (IFC) raised Rs 1,000 crore (USD 160 million) in the US from its first offshore sale of rupee bonds.

The three-year bond was offered and settled in USD. The IFC will convert the proceeds into rupees in the domestic spot exchange market and use the money to finance private sector investments in the country.

The bonds carry a coupon of 7.75 percent and will be listed on the Luxembourg and Singapore exchanges. The idea of such a bond was mooted when the rupee depreciated during the June-August period amid heightened worries the US would start tapering its USD 85 billion a month bond buying programme to stimulate the American economy.

It was believed that the IFC offering would provide some relief to the rupee against the US dollar. Recently, ADB agreed to provide loan of USD 2 billion annually for five years till 2017 to India to create jobs, enhance investment reforms, and improve infrastructure.

The resource envelope for sovereign operations is about USD 2 billion per year for the next five years and India will remain ADB's largest single country borrower, he said.

PTI