India Infrastructure Finance Company Ltd (IIFCL) is not currently looking to mobilise funds through ‘masala bonds’ in the overseas market, said Chairman & Managing Director SB Nayar.

There is no question of looking at ‘masala bonds’ now given that the cost of raising funds in the domestic market will be cheaper than tapping the offshore market under this bond route, Nayar told BusinessLine on the sidelines of conference on revitalising Public Private Partnerships (PPP) in Infrastructure.

Masala bonds are Indian rupee-denominated bonds issued in offshore capital markets. However, these are offered and settled in US dollars to raise Indian rupees from international investors for infrastructure development in India. The RBI had in September 2015 issued guidelines allowing Indian corporates, NBFCs, real estate investment trusts and infrastructure investment trusts to issue masala bonds

In November last year, IIFCL had said that it was planning a ‘masala bond’ issue early 2016 with a potential resource mop-up of $1 billion.

It was looking at leading financial centres such as London and Singapore for issuing these bonds.

Meanwhile, Sanjeev Kaushik, Deputy Managing Director, IIFCL, said that the government-owned company does not want to face any queries from Comptroller and Auditor General of India (CAG) and therefore decided not to go in for ‘masala bonds’ now when the cost of raising overseas funds is on the higher side.

Kaushik, however, said that IIFCL’s London subsidiary may in the coming days look at raising dollar denominated debt resources from offshore markets.

Asked if the recent Brexit vote had any impact of IIFCL’s London subsidiary operations, Nayar replied in the negative. There is also no plan to shift IIFCL’s subsidiary office out of London.

Private mortgage lender Housing Development Finance Corporation (HDFC) had in mid-July raised ₹3,000 crore through masala bonds and was the first corporate entity to issue them, following issuances by International Finance Corporation (IFC) and Asian Development Bank (ADB).