Consider the following:
1. Foreign currency convertible bonds.
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits
Which of the above can be included in Foreign Direct Investments?
(a) 1, 2, and 3
(b) 3 only
(c) 2 and 4
(d) 1 and 4
Answer: a
Explanation:
FDI is the investment made by an entity of an economy other than its national economy, into an entity of a foreign nation where it wants to have substantial influence and control over the entity.
FPI are the foreign institutional or individual investors who invest in the security market other than the domestic security market, in different class of assets like bonds, debenture, equity etc.
Global Depository Receipts is a financial instrument in the form of depository created by the overseas depository banks/financial institutions issued in more than one country. GDR is just like ADR but traded in non-US market like Japan, London, Singapore, Hong Kong or any other stock exchanges.
Foreign Currency Convertible Bonds. (FCCB) are bonds issued by the Indian company expressed in foreign currency, to the nonresident investors.
The principal and interest in respect of the instrument are paid in the specified foreign currency. The bonds are convertible into shares of the issuing company in any manner like, wholly or partly or on the basis of any equity-related warrant attached to the debt security.
Hence, option a is correct.
Read: Solved Economy PYQs With Explanation 2021 UPSC Prelims