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3 Lec : - Coggle Diagram
3 Lec :
Debt INtru
- External Commercial Borrowing (ECB)
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- Foreign Currency Convertible Bonds (FCCB)
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- Denominated in Indian Rupees
- Investors bear currency risk
- Agreement between two companies
- US company raises loan at 6%
- US subsidiary of Indian Company raises loan at 8%
- Indian company raises loan at 9%
- Indian Subsidiary of US company raises loan at 11%
- Agreement between two countries
- Currency swap agreement worth $75 billion
- GIFT (Gujarat International Financial Tech) City
- Domestic transactions in Rupee
- International Financial Services Centre (IFSC)
- Foreign currency transactions
- Sale of government shareholding
- Transfer of management control
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- Investments from individuals, companies, and NRIs in Indian companies' capital instruments
- Ownership and voting rights in a company
- Preferential rights for dividends and capital repayment
- Debt instruments convertible into equity shares
- Right to subscribe to equity shares at a predetermined price
- Foreign Investment Classification
- Foreign Direct Investment (FDI)
- Investment in unlisted Indian companies or holding 10% or more equity capital in listed Indian companies
- Foreign Portfolio Investment (FPI)
- Investment in capital instruments of listed Indian companies (<10% of equity capital) and government/corporate bonds
- Automatic Route (no approval required)
- Government Approval Route
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- RBI for reporting capital inflow
- SEBI for FPI approval/license
3rd
- Balance of Payments (BoP):
- BoP systematically summarizes the economic transactions of a country with the rest of the world for a given period.
- BoP of India records all transactions between Indian residents and non-residents/foreigners.
- BoP has two main components:
- Current account comprises visible trade (export and import of goods), invisible trade (export and import of services), unilateral transfers, and investment income.
- Remittances from Non-Resident Indians (NRIs) are counted in the current account.
- Current Account Convertibility:
- RBI allows full conversion of Rupee into foreign currencies and vice versa for transactions under the current account.
- Rupee is fully convertible at the current account, enabling transactions such as imports and exports.
- Capital account records the inflows and outflows of capital that affect a country's foreign assets and liabilities.
- Capital account transactions include foreign investments like FDI and FPI, loans by companies and governments, and banking capital such as NRI deposits.
- Capital Account Convertibility:
- RBI does not allow full conversion of Rupee into foreign currencies and vice versa for transactions falling under the capital account.
- There are restrictions and limits imposed by RBI and the government on capital account transactions.
- Capital account convertibility is introduced when macroeconomic parameters are stable, balance of payments is under control, and sufficient forex reserves are available.
- BoP surplus or deficit is obtained by adding the current account and capital account balance.
- Forex reserves are affected by the balance of payment surplus or deficit.
- Strategic disinvestment refers to the sale of government shareholding, transfer of management control, and privatization process.
- The policy covers existing Central Public Sector Enterprises (CPSEs), Public Sector Banks, and Public Sector Insurance Companies.
- Various sectors are classified as strategic and non-strategic sectors, and the remaining CPSEs in strategic sectors will be privatized, merged, subsidiarized, or closed.