International Finance Corporation (IFC), a member of the World Bank Group, has launched a $1-billion masala bond programme to fund its investment activities in India, it said on Friday.

As the Indian government looks to boost capital flows into the country, it has taken various steps to support masala bonds (rupee-denominated borrowings issued overseas). The government has exempted these from withholding tax and the RBI has permitted banks to issue masala bonds overseas to meet its capital requirements or to fund infrastructure and affordable housing.

The first tranche of $100 million of the IFC's programme opened on the London Stock Exchange on Thursday night. The statement said that it was sold to investors ranging from asset managers, banks, and a pension fund in the United States and Europe.

"Our investment activities in India touched a record high last year. In line with our strategy, we have made big strides in the areas of affordable housing, SME finance, distressed assets resolution, renewable energy, logistics, and disruptive technologies. Our pipeline remains strong, and this masala bond programme will help us support our investment activities in the near and medium term," said Mengistu Alemayehu, director, South Asia, IFC.

In 2013, it had pioneered the masala bonds programme to finance its investment activities in India and support capital market development. The title "masala" was given to bring a sense of India to the programme.