KIIFB approves Rs16,000 cr projects; Masala bond on back burner?

Pravasi chity receives good response

THIRUVANANTHAPURAM: Even as projects worth a whopping Rs16,000 crore have been green-signaled and the much-talked-about  Pravasi chitti has taken off well, the masala bond is understood to have been put on the back burner, at least for the time being.

According to a KIIFB document, the total amount of projects approved by the KIIFB board currently stands at Rs39,708 crore. KIIFB said the Pravasi chity (kuri) that was formally opened for subscription on October 25 had received an overwhelming response, and in the first five days of its launch itself, the total subscription across all chitties surpassed Rs1.2 crore from more than 1000 subscribers.

“More than 25 chities have been completely subscribed during this period,” KIIFB said. But there is a growing feeling in the financial circles that the KIIFB may ultimately drop the plan for Masala bond after having failed to get an investment grade rating from international rating agencies.

The chief executive had said in his message last month that the KIIFB Board would be apprised of a possible timeline for issuing masala bond while the board meets for its crucial meeting on October 25.

However, there has not been any news on this yet. Nor has been any response yet to the query sent by on the matter.

Airing their views on the fate of the prospective masala bond following the announcement of S&P’s long term BB rating in September, most experts in the field had argued that it would be extremely difficult for KIIFB to approach the overseas market due to the rating that is below investment grade. And more so because the subscriptions are sought to a bond that is denominated in rupee – a currency that has been hammered badly in the market for the past few months.

Referring to the developments at the crucial meetings on October 24 and 25, The KIIFB CEO said the board had approved a basic format for an asset-liability management policy.

“Given the diverse nature of funding sources the board aspires to rely on – ranging from short, medium- and long-term bonds from Non-Resident Indians (NRI) chitties, medium and long tenor bonds, term loans from banks, institutional finance from NABARD, HUDCO etc., apart from a steady stream of revenue from the government, raised through cess on petrol and share of the motor vehicles tax (MVT), an asset-liability management (ALM) regime is of paramount importance,” said the CEO.

However, KIIFB said it believed that an appropriate ALM policy could be meaningfully attempted only after a longer track record. The board said the recommendation to this end would be placed before the Funds Trustee and Advisory Commission (FTAC) in the coming meeting.


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