The International Finance Corporation, the World Bank arm for private sector development, is selling Indian rupee-linked bonds in order to finance private sector investment in India.
The IFC intends to raise $1bn (£630m, €738m) from its offshore bond programme, the largest of its kind in the offshore rupee market, in a bid to ease foreign investment concerns over the state of India's economy.
The World Bank arm said the bond offering will strengthen India's capital markets and attract greater foreign investment in the country.
"Vibrant domestic capital markets ensure access to long-term, local currency finance for the private sector- the key engine of job creation in emerging markets," IFC CEO Jin-Yong Cai said in a statement.
"IFC's offshore bond programme will help bring depth and diversity to the offshore rupee market and pave the way for an alternative source of funding for Indian companies."
Rising IFC Investment in India
Asia's third-largest economy has, so far, benefitted the most from IFC's investment programmes, with $4.5bn of committed investment portfolio as of 30 June this year.
In fiscal year 2013, India received $1.38bn investment from the IFC for promoting growth in India's low-income states, addressing climate change, and supporting global economic integration.
"We see IFC as an important development partner. It has been contributing significantly in financing private sector projects, including public-private partnerships, in several key developmental areas," said Arvind Mayaram, Secretary of Economic Affairs in India's Ministry of Finance.
The new rupee bond programme will "help deepen the capital markets in India and establish an Indian rupee benchmark in the global markets," Mayaram added.
Help in Hard Times
The IFC programme is aimed at boosting confidence of foreign investors, who were sceptical about India's prospects as its currency has suffered a major slide over the past few months.
The rupee plunged to an all-time low of 68.80 against the dollar in August, amid fears about the US paring its bond buyback programme. It has fallen 16% against the dollar in the past 12 months, making it one of worst performing major currencies in Asia.
As a result, foreign investors have cut holdings of rupee-denominated debt to $25.9bn as of 8 October, the lowest since December 2011, according to official data.
However, promises by newly-appointed Reserve Bank of India head, Raghuram Rajan, and a delay in the US stimulus tapering have stopped the currency from falling further.
The US dollar is trading at 62.06 rupees as at 10:16 am GMT, up 0.20%.