The International Finance Corporation (IFC) has announced its plans to launch India's first offshore rupee bond issue to raise $1 billion from foreign investors.

The rupee-linked bonds issue aims at strengthening the country's capital markets and attracting greater foreign investments. The proceeds from the issue will be used to finance private sector projects in the country.

IFC Chief Executive Jin-Yong Cai said vibrant domestic capital markets would ensure access to long-term, local-currency finance for the private sector, which is the main job generator in emerging markets.

India's Economic Affairs Secretary Arvind Mayaram said that bonds issue was a significant step towards the process of internationalization of the rupee bond market.

Speaking about the issue, Mayaram added, "This is the first time we are testing how global rupee bond issuance is accepted by the world."

Over the past years, IFC issued bonds in thirteen local currencies, including Nigeria's naira, Russia's rouble, Brazil's real, and China's renminbi.

In 2010, India approved a symbol for rupee to allow the currency to distinguish from rupees of other countries such as Nepal, Sri Lanka and Pakistan.