International Capital Market

International Capital Market

International Sources of Business Finance There are various avenues fororganisations to raise funds internationally.

The establishment of Indian economy after 1990s, has facilitated many Indian companies to expand their operations beyond the frontiers of India. Many Indian companies are now able to access funds in the international financial market. The various international sources from where funds may be generated are

1. Commercial Banks

Most of the commercial banks extend foreign currency loans for promoting business opportunities. The loans and services of various types, provided by banks differ from country to country.

2. International Agencies and Development Banks

International agencies and Development banks play an important role to promote international trade and business. They provide term loans and grants to promote the development of economically backward areas in the world. International Finance Corporation (IFC), EXIM  Bank  and Asian Development Bank are the agencies operating at International level to meet the needs of the international finance.

3. International Capital Markets

Modern organisations including multinational companies depend upon sizeable borrowings in rupees as well as in foreign currencies. Prominent financial instruments used for this purpose are Depository Receipts.

Depositary Receipts(DRs)

A depository receipt is a negotiable financial instrument issued by a bank to represent a foreign company’s equity shares or securities. They are issued to attract a greater amount of investment from other countries. Any foreign investor can invest in a foreign stock directly without worrying about differences in currency, accounting practices, or language barriers, etc.