Rupee denominated bonds (RDBs) are bonds that are issued in Indian rupees. They are typically issued by foreign companies that want to raise capital in India. RDBs can be a good way for foreign companies to tap into the Indian capital market.
MCQs on rupee denominated bonds (RDBs)
- Which of the following is not a feature of rupee denominated bonds (RDBs)?
- They are issued in Indian rupees.
- They are typically issued by foreign companies.
- They can be a good way for foreign companies to tap into the Indian capital market.
- They are subject to the same regulations as other types of bonds.
- Answer: They are subject to the same regulations as other types of bonds.
- RDBs are typically issued by:
- Foreign companies
- Indian companies
- Both of the above
- None of the above
- Answer: Foreign companies
- RDBs can be a good way for foreign companies to tap into the Indian capital market because:
- They can offer a higher interest rate than other types of bonds.
- They can be a good way to diversify their funding sources.
- They can be a good way to get exposure to the Indian economy.
- All of the above
- Answer: All of the above
- RDBs are subject to the same regulations as other types of bonds, such as:
- The Companies Act, 2013
- The Securities and Exchange Board of India (SEBI) Act, 1992
- The Foreign Exchange Management (Non-Debt Instruments) Regulations, 2019
- All of the above
- Answer: All of the above
Conclusion
Rupee denominated bonds (RDBs) can be a good way for foreign companies to tap into the Indian capital market. However, they are subject to the same regulations as other types of bonds. Foreign companies should seek the advice of a financial advisor before issuing RDBs.
Here are some additional points to keep in mind about RDBs:
- RDBs are typically issued in denominations of ₹5 million or more.
- RDBs can have a maturity of up to 30 years.
- RDBs are typically listed on the Bombay Stock Exchange (BSE) or the National Stock Exchange of India (NSE).