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 the 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

[UPSC Civil Services Exam – 2016 Prelims]

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither1 nor 2

Answer: (c)        

Explanation:

The World Bank Group (WBG) consists of five organizations –

• International Bank for Reconstruction and Development (IBRD)
• International Development Association (IDA)
• International Finance Corporation (IFC) (Hence statement 1 is correct)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)

IFC Masala Bonds:

• The first Masala bond was issued by IFC in 2014 for the infrastructure projects in India.
• They are the rupee-denominated bonds issued to offshore investors and are a source of debt financing for the public and private sectors. (Hence statement 2 is correct)