London is fast becoming India’s leading financial hub pumping billions for Indian businesses thanks to ‘Masala Bonds.’ They are Rupee-denominated global paper duly approved by Reserve Bank of India. Already London is ahead of New York as the world’s most competitive financial centre, says Z/Yen Group rankings. London is taking an important role in India’s growth story. With India looking for $1 trillion funding over the next decade to rebuild infrastructure to global standards, bonds purchased by financial investors are significant. The process with bonds is--investors in leading financial centres buy bonds and papers floated by manufacturing, infrastructure, technology and financial services for various projects. In the past, Indian companies used to raise foreign currency debt via direct bank loans or dollar and other foreign currency-denominated bonds. Later they are converted into rupees and repatriated to India for investment, reports India Incorparated. But Masala bonds denominated in Indian currency offer the advantage of exchange volatility related burden passing on from the issuing company to the investor. The World Bank’s private sector investment arm, International Finance Corporation (IFC) issued the first rupee-denominated overseas bond in 2013. Rupee bonds are relatively small ticket sizes. They are popular in Japan also. But London offers Indian issuers a wider access to investors and popularises this paper. Indian Railways and many private and public sector corporations are set to take the masala bond route. HDFC, IIFCL, Power Finance Corporation Ltd, NTPC are planning overseas rupee bond in London. Prime Minister David Cameron’s government is very supportive of rupee bonds. “The rupee is not fully convertible. Hence, the first lot of investors in masala bonds could find it difficult to offload their holdings in the secondary markets. The British government’s support will boost sentiment and make overseas rupee bonds more acceptable to foreign investors,” said an ex Finance Ministry bureaucrat.