About foreign direct investment. Foreign Direct Investment or FDI is the process whereby residents of one country (the source country) acquire ownership of assets for the purpose of controlling the production, distribution, and other activities of a firm in another country (the host country). The international monetary fundâs balance of payment manual defines FDI as an investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor. The investorsâ purpose being to have an effective voice in the management of the enterpriseâ. The united nations 1999 world investment report defines FDI as âan investment involving a long term relationship and reflecting a lasting interest and control of a resident Continue reading
Indian Economy
Composition and Importance of Money Market
Composition of Money Market The money market is not a single homogeneous market. It consists of a number of sub-markets which collectively constitute the money market. There should be competition within each sub-market as well as between different sub-markets. The following are the main sub-markets of a money market: Call Money Market. Commercial Bills Market or Discount Market. Acceptance Market. Treasury bill Market. Indian money market was highly regulated and was characterized by limited number of participants. The limited variety and instruments were available. Interest rate on the instruments was under the regulation of Reserve Bank of India. The sincere efforts for developing the money market were made when the financial sector reforms were started by the government. Money markets Continue reading
Money Market â Definition, Features and Instruments
As per the definition of Reserve Bank of India, money market is âa market for short terms financial assets that are close substitute for money, facilitates the exchange of money in primary and secondary marketâ. Indian money market was highly regulated and was characterized by limited number of participants. The limited variety and instruments were available. Interest rate on the instruments was under the regulation of Reserve Bank of India. The sincere efforts for developing the money market were made when the financial sector reforms were started by the government. Money markets are the markets for short-term, highly liquid debt securities. Examples of these include bankersâ acceptances, repos, negotiable certificates of deposit, and Treasury Bills with maturity of one year Continue reading
All About Call Money Market in India
The call money market refers to the market for extremely short period loans; say one day to fourteen days. These loans are repayable on demand at the option of either the lender or the borrower. The money that is lent for one day in this market is known as âCall Moneyâ, and if it exceeds one day (but less than 15 days) it is referred to as âNotice Moneyâ. Term Money refers to Money lent for 15 days or more in the Inter Bank Market.  These loans are given to brokers and dealers in stock exchange. Similarly, banks with âsurplusâ lend to other banks with âdeficit fundsâ in the call money market. Thus, it provides an equilibrating mechanism for evening Continue reading
Commercial Bill â Meaning, Characteristics and Types
Bills of exchange are negotiable instruments, drawn by the seller (drawer) of the goods on the buyer (drawee) of the goods for the value of the goods delivered. These bills are known as trade bills. Trade bills are called commercial bills when they are accepted by commercial banks. If the bill is payable at a future date and the seller needs money during the currency of the bill, he may approach his bank to discount the bill. The maturity proceeds or face value of a discounted bill from the drawee is received by the bank. If the bank needs funds during the currency of bill, it can rediscount the bill that has been already discounted by it in the commercial Continue reading