Which neighbouring country of India approved the issuance of yuan denominated Panda bonds in the Chinese capital market to raise funds?

Introduction / Context:
Panda bonds are yuan denominated bonds issued by foreign entities in the Chinese domestic bond market. They have become a part of international finance as countries look to diversify their sources of borrowing and deepen economic ties with China. Several nations, including some of India s neighbours, have considered issuing such bonds. This question tests knowledge of which specific neighbouring country formally approved the issuance of Panda bonds as a way to raise funds from Chinese investors.

Given Data / Assumptions:

- The instrument in question is a Panda bond, denominated in Chinese yuan. - The issuing entity is a neighbouring country of India. - The options are Afghanistan, Pakistan, Bangladesh and Nepal. - Only one of these countries appears in news reports as approving a Panda bond issue.

Concept / Approach:
Panda bonds allow foreign governments or companies to tap into China s domestic bond market. For a country to issue such bonds, there must be regulatory approval from its own authorities and acceptance by Chinese regulators. Pakistan, which has close economic ties with China through projects like the China Pakistan Economic Corridor, has actively sought alternative funding sources and has approved the issuance of Panda bonds to raise capital. The approach is to link this financial decision with broader economic and diplomatic relations between China and its neighbours.

Step-by-Step Solution:

Verification / Alternative check:
Verification can be done by examining compilations of international economic current affairs covering decisions of South Asian governments. These compilations often include a note that Pakistan s cabinet or economic authorities approved a plan to issue Panda bonds denominated in Chinese yuan in order to diversify sources of funding. Such notes generally do not attribute similar approvals to Afghanistan, Bangladesh or Nepal in the same time frame, reinforcing the choice of Pakistan for this question.

Why Other Options Are Wrong:
Afghanistan has been more focused on basic reconstruction and aid than on issuing sophisticated capital market instruments like Panda bonds. Bangladesh has explored various funding channels but is not the country singled out in general knowledge sources for Panda bond approval in the Chinese market. Nepal has financial ties with both India and China but similarly has not been presented in exam materials as approving Panda bond issuance. None of the above is incorrect because Pakistan is the neighbouring country recognised for this step in most current affairs notes.

Common Pitfalls:
Some students may guess Bangladesh or Nepal simply because they are often in the news for development loans and infrastructure projects. Others might misremember the specific financial instrument and mix up Panda bonds with other bond types like Masala bonds, which are rupee denominated instruments issued outside India. To avoid such confusion, it is useful to associate each bond type with a simple keyword, such as Panda with China and Masala with Indian rupees, and to memorise which country took which step.

Final Answer:
The neighbouring country of India that approved the issuance of yuan denominated Panda bonds in the Chinese market is Pakistan.