The groundwork for the New Development Bank’s proposed rupee bonds in India is falling into place. IRDAI has permitted Indian insurers to invest in them, and the CBDT has added a tax notification issued on October 19. Both are enabling steps, but no issue date, tranche size, or pricing has been reported so far.
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Timeline of NDB’s Rupee Bond Plans
| When | Development |
| About two years before September 2025 | NDB had planned to tap the rupee bond market, but issuance was delayed because government and central bank approvals did not materialize. |
| September 2025 | Sources told Reuters that NDB planned its first rupee bond in the domestic market before end-March 2026. |
| August 27, 2026 | IRDAI permits insurers to invest in the bonds. |
| October 19, 2026 | CBDT notifies the TDS exemption. |
| Next | Issue date, size, coupon and tenor not yet reported |
What the Exemption Covers
The exemption applies to interest paid by NDB to holders of Maharajah INR Bonds in tax year 2026-27 and later years. It covers residents, whether individuals or entities, and Foreign Institutional Investors. In practice, NDB will not deduct tax at source when paying interest to these holders.
What Are Maharajah Bonds?
A maharajah bond is an onshore, rupee-denominated bond issued within India, which sets it apart from masala bonds issued in global markets. NDB is a multilateral development bank founded by the BRICS countries and headquartered in Shanghai, financing infrastructure and sustainable development in emerging economies. It is not the first international lender to use the format: the International Finance Corporation raised ₹600 crore through its own maiden maharaja bonds.
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The Funding Plan
NDB proposes to raise about ₹25,000 crore over five years through the bonds. The proceeds would go to infrastructure, green, social and sustainable-development projects. Because the bonds are denominated in rupees, they would let the bank raise domestic capital for lending to projects in India.
Why It Matters
With insurers permitted to invest and interest now free of deduction at source, the bonds may be easier to market to domestic institutions. A TDS exemption removes the deduction at source, though, and does not by itself make the income tax-free, so holders would still need to account for it in their returns.
What to Watch
- Terms of the first issue, including size, coupon and tenor, which will show how much demand the exemption generates
- The issue date, which has not been announced
- Whether NDB prices the bonds in line with other rupee issues from multilateral lenders
- Whether other multilateral lenders that have issued rupee bonds seek similar treatment
What It Means for Investors
Anyone considering the bonds should wait for the final terms and check the notification for any conditions that apply to their category of investor. The tax treatment is only one part of the picture, alongside coupon, tenor and the bank’s credit standing.
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