Option (a) 1, 2 and 3 only can be included in Foreign Direct Investments.
Foreign Currency Convertible Bonds (FCCBs)
Definition:
Foreign Currency Convertible Bonds are a type of debt instrument issued by a company that can be converted into equity shares of the issuing company at a later date. They are typically issued in a currency other than the local currency of the issuer.
Key Features:
- Conversion Option: Investors have the option to convert the bonds into a specified number of equity shares, usually at a predetermined price.
- Interest Payments: FCCBs pay interest to bondholders, which is usually lower than that on non-convertible bonds due to the added value of conversion.
- Currency: Issued in foreign currencies, which can provide an attractive option for international investors.
- Purpose: Companies use FCCBs to raise capital while potentially benefiting from the currency diversification.
Foreign Institutional Investment (FII) with Certain Conditions
Definition:
Foreign Institutional Investment (now commonly referred to as Foreign Portfolio Investment or FPI) involves investment by foreign institutions, such as mutual funds, pension funds, and hedge funds, in financial markets of a country, typically in stocks, bonds, and other securities.
Key Features:
- Investment Types: Includes equities, debt instruments, and derivatives.
- Regulation: Subject to specific regulatory requirements and conditions imposed by the host country’s financial authorities.
- Control: Does not provide control or significant influence over the companies in which investments are made.
- Liquidity: Generally high liquidity, allowing for easy buying and selling of securities.
Global Depository Receipts (GDRs)
Definition:
Global Depository Receipts are financial instruments that represent shares in a foreign company. They are issued by a depository bank and traded on international stock exchanges.
Key Features:
- Representation: GDRs represent a specific number of shares in a company, and each GDR corresponds to a certain number of underlying shares.
- Trading: Traded on international exchanges, making it easier for investors to buy shares of foreign companies.
- Currency: Issued in a currency different from the home currency of the issuing company, facilitating international investment.
- Purpose: Used by companies to raise capital from global investors and increase their international presence.
Non-Resident External Deposits (NRE Deposits)
Definition:
Non-Resident External Deposits are bank accounts held by non-resident Indians (NRIs) in India. These accounts are primarily used to manage income earned outside India and repatriate funds back to the country of residence.
Key Features:
- Currency: Held in Indian Rupees (INR) and repatriable, meaning funds can be transferred back to the country of residence.
- Interest Rates: Generally offer competitive interest rates, often tax-free in India.
- Taxation: Interest earned is exempt from Indian income tax.
- Usage: Used for depositing income earned outside India, managing savings, and repatriating funds.
Summary
- Foreign Currency Convertible Bonds (FCCBs): Debt instruments that can be converted into equity shares, issued in foreign currencies.
- Foreign Institutional Investment (FII)/Foreign Portfolio Investment (FPI): Investments by foreign institutions in financial markets, typically with no control over the companies and high liquidity.
- Global Depository Receipts (GDRs): Financial instruments representing shares of foreign companies, traded internationally.
- Non-Resident External Deposits (NRE Deposits): Bank accounts for NRIs in India, held in INR, repatriable, and tax-exempt.
Each of these financial instruments serves different purposes and caters to various investor needs, ranging from capital raising and investment diversification to facilitating international trade and investment.
Option (a) 1, 2 and 3 only can be included in Foreign Direct Investments.
Foreign Currency Convertible Bonds (FCCBs)
Definition:
Foreign Currency Convertible Bonds are a type of debt instrument issued by a company that can be converted into equity shares of the issuing company at a later date. They are typically issued in a currency other than the local currency of the issuer.
Key Features:
- Conversion Option: Investors have the option to convert the bonds into a specified number of equity shares, usually at a predetermined price.
- Interest Payments: FCCBs pay interest to bondholders, which is usually lower than that on non-convertible bonds due to the added value of conversion.
- Currency: Issued in foreign currencies, which can provide an attractive option for international investors.
- Purpose: Companies use FCCBs to raise capital while potentially benefiting from the currency diversification.
Foreign Institutional Investment (FII) with Certain Conditions
Definition:
Foreign Institutional Investment (now commonly referred to as Foreign Portfolio Investment or FPI) involves investment by foreign institutions, such as mutual funds, pension funds, and hedge funds, in financial markets of a country, typically in stocks, bonds, and other securities.
Key Features:
- Investment Types: Includes equities, debt instruments, and derivatives.
- Regulation: Subject to specific regulatory requirements and conditions imposed by the host country’s financial authorities.
- Control: Does not provide control or significant influence over the companies in which investments are made.
- Liquidity: Generally high liquidity, allowing for easy buying and selling of securities.
Global Depository Receipts (GDRs)
Definition:
Global Depository Receipts are financial instruments that represent shares in a foreign company. They are issued by a depository bank and traded on international stock exchanges.
Key Features:
- Representation: GDRs represent a specific number of shares in a company, and each GDR corresponds to a certain number of underlying shares.
- Trading: Traded on international exchanges, making it easier for investors to buy shares of foreign companies.
- Currency: Issued in a currency different from the home currency of the issuing company, facilitating international investment.
- Purpose: Used by companies to raise capital from global investors and increase their international presence.
Non-Resident External Deposits (NRE Deposits)
Definition:
Non-Resident External Deposits are bank accounts held by non-resident Indians (NRIs) in India. These accounts are primarily used to manage income earned outside India and repatriate funds back to the country of residence.
Key Features:
- Currency: Held in Indian Rupees (INR) and repatriable, meaning funds can be transferred back to the country of residence.
- Interest Rates: Generally offer competitive interest rates, often tax-free in India.
- Taxation: Interest earned is exempt from Indian income tax.
- Usage: Used for depositing income earned outside India, managing savings, and repatriating funds.
Summary
- Foreign Currency Convertible Bonds (FCCBs): Debt instruments that can be converted into equity shares, issued in foreign currencies.
- Foreign Institutional Investment (FII)/Foreign Portfolio Investment (FPI): Investments by foreign institutions in financial markets, typically with no control over the companies and high liquidity.
- Global Depository Receipts (GDRs): Financial instruments representing shares of foreign companies, traded internationally.
- Non-Resident External Deposits (NRE Deposits): Bank accounts for NRIs in India, held in INR, repatriable, and tax-exempt.
Each of these financial instruments serves different purposes and caters to various investor needs, ranging from capital raising and investment diversification to facilitating international trade and investment.
Option (a) 1, 2 and 3 only can be included in Foreign Direct Investments.
Foreign Currency Convertible Bonds (FCCBs)
Definition:
Foreign Currency Convertible Bonds are a type of debt instrument issued by a company that can be converted into equity shares of the issuing company at a later date. They are typically issued in a currency other than the local currency of the issuer.
Key Features:
- Conversion Option: Investors have the option to convert the bonds into a specified number of equity shares, usually at a predetermined price.
- Interest Payments: FCCBs pay interest to bondholders, which is usually lower than that on non-convertible bonds due to the added value of conversion.
- Currency: Issued in foreign currencies, which can provide an attractive option for international investors.
- Purpose: Companies use FCCBs to raise capital while potentially benefiting from the currency diversification.
Foreign Institutional Investment (FII) with Certain Conditions
Definition:
Foreign Institutional Investment (now commonly referred to as Foreign Portfolio Investment or FPI) involves investment by foreign institutions, such as mutual funds, pension funds, and hedge funds, in financial markets of a country, typically in stocks, bonds, and other securities.
Key Features:
- Investment Types: Includes equities, debt instruments, and derivatives.
- Regulation: Subject to specific regulatory requirements and conditions imposed by the host country’s financial authorities.
- Control: Does not provide control or significant influence over the companies in which investments are made.
- Liquidity: Generally high liquidity, allowing for easy buying and selling of securities.
Global Depository Receipts (GDRs)
Definition:
Global Depository Receipts are financial instruments that represent shares in a foreign company. They are issued by a depository bank and traded on international stock exchanges.
Key Features:
- Representation: GDRs represent a specific number of shares in a company, and each GDR corresponds to a certain number of underlying shares.
- Trading: Traded on international exchanges, making it easier for investors to buy shares of foreign companies.
- Currency: Issued in a currency different from the home currency of the issuing company, facilitating international investment.
- Purpose: Used by companies to raise capital from global investors and increase their international presence.
Non-Resident External Deposits (NRE Deposits)
Definition:
Non-Resident External Deposits are bank accounts held by non-resident Indians (NRIs) in India. These accounts are primarily used to manage income earned outside India and repatriate funds back to the country of residence.
Key Features:
- Currency: Held in Indian Rupees (INR) and repatriable, meaning funds can be transferred back to the country of residence.
- Interest Rates: Generally offer competitive interest rates, often tax-free in India.
- Taxation: Interest earned is exempt from Indian income tax.
- Usage: Used for depositing income earned outside India, managing savings, and repatriating funds.
Summary
- Foreign Currency Convertible Bonds (FCCBs): Debt instruments that can be converted into equity shares, issued in foreign currencies.
- Foreign Institutional Investment (FII)/Foreign Portfolio Investment (FPI): Investments by foreign institutions in financial markets, typically with no control over the companies and high liquidity.
- Global Depository Receipts (GDRs): Financial instruments representing shares of foreign companies, traded internationally.
- Non-Resident External Deposits (NRE Deposits): Bank accounts for NRIs in India, held in INR, repatriable, and tax-exempt.
Each of these financial instruments serves different purposes and caters to various investor needs, ranging from capital raising and investment diversification to facilitating international trade and investment.
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