Multiple choice

At present, Indian companies are allowed to access funds from abroad through which of the following methods?

  1. External Commercial Borrowings (ECB)
  2. Foreign Currency Convertible Bonds (FCCBs)
  3. Preference shares
  4. Foreign Currency Exchangeable Bond (FCEB)

  1. Only 1

  2. 1 and 2

  3. 2, 3 and 4

  4. 1, 2, 3 and 4

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

At present, Indian companies are allowed to access funds from abroad in the following methods: (i) External Commercial Borrowings (ECB) refer to commercial loans in the form of bank loans, buyers' credit, suppliers' credit, and securitized instruments. ECB can be accessed under two routes, viz. automatic route and approval route. (ii) Foreign Currency Convertible Bonds (FCCBs) mean a bond issued by an Indian company expressed in foreign currency and the principal and interest in respect of which is payable in foreign currency. (iii) Preference Shares (i.e. non-convertible, optionally convertible or partially convertible) (iv) Foreign Currency Exchangeable Bond (FCEB) means a bond expressed in foreign currency, the principal and interest in respect of which is payable in foreign currency issued by an issuing company and subscribed to by a person who is a resident outside India, in foreign currency, and exchangeable into equity share of another company. Hence, option 4 is correct.