6 GLOBAL FINANCIAL SYSTEM | When multinational enterprises finalises its foreign investment project, it needs to | select @ particular source, or mix of sources of funds to finance the project. A domestic | tiem gets funds normally from domestic sources. It does get funds from the international | financial market too but it is not easy as in case of a multinational company. The multinational company can also get funds from host country financial market, but it tries to get funds from international financial market. It selects a particular source or mix of ‘sources or @ particular type or types of funds that suits its corporate objectives. ‘Sources of Finance t ‘The international financial market can be divided into two parts. One is international | Money market which provides short-term funds, short-term securities. On the other ‘lrrespective of such a difference between two segments of international financial Market, there are number of agencies and financial instruments through which funds can be raised by needy firms. The finance providing agencies may be official or non- Official. Among the official agencies, are the multinational institutions such as World ‘Bank, IFC, ADB etc., and bilateral agencies or the different governmental agencies. ‘The non-official sources include securities market and borrowing and lending market ‘wolving international banks, “ees Official Sources Non-official Sources 1. The World Bank 1, International Banks ()) FC 2. Securities Market () IDA (Ww) IGA ? International Monetary Fund § Asean Development Bank 4. UNCTAD 5 BM BankGlobal Financial System THE WORLD BANK Agriculture, Forestry, erational Bank for Reconstruction and Development (IBRD) ing, Industrial Secor, sank wes esablsed 945 under the Breton Woods Agreement of 1944 Technical Assistance, (0% ote tal tng bringing about smooth stuation from a war-time to peacetime economy, tt Population control, tourism, urbanisation, institution of the Intemational Monetary Fund. Sit Drainage etc. Membership Funding Objectives of the Bank slo Te mee oe nena ya Chae othe ay Tiiale svat maeeat nae ass subscrbet The members ofthe Inematioal Monetary Fund are he ioe oe he mart. es i Mbers To provide funds tothe borrowers atthe possible west cost the IBRD. Ithad 181 members countries in June 1996, However, the mer ber ‘through manipulating Sith} te curency mand opting the te when the terest tenth me to poy ab oe nh ea ae aes counry resign ts membership ui control fluctuations in net income and overl charges othe he, a a to pay all loans with interest on due dates een eat Bank's Borrowings-One ofthe important actives of the Bank borrow, PonctiGes der to lend the funds, borrows the money, fre ong rc TEN: te TER, a cae the Wd w Dorrows In the interatonal capt market both on medium term and tng Performs the following functions : term basis. 70 asst in the reconstruction and development of territories is members| (i) It also borrows on currency Swap Agreements. fRoimating the investment of capital for productive purpose nd the encourage (ii) It borrows under the Discount net programme. oe Te men of rode fecities and resources in developing coon ies. IBRO’s borrowing instruments include Central Bank Fecity and US dor dominates fa oe ae freon investment by means of guarantees on perc ix | _faiity. The World Bank borrows from the Cental Banks ofthe member coureres men scons and other investment made by private investors, when ex Not vaiate| the help ofthese instruments Ancther instruments eating ate Notes IBRD bese Prodan le term’, to supplement private investment by soe fing finance fa} fromthe commercial banks and other ancl nsttutons wh the help of ths retonene Droductive Purpose out of Is Own resources oF fom borrowely fone Bank's Lending Activities—Bank grants loans tothe member countries as felons, ere are tne Wngrange balanced growth of international trade (0 Granting loans from is own funds. emanance of equilrium in the balance of payments of meoraat abel {Granting loans from the funds borrowed by the Barkin the market of the member inh Neo ea eocuctveresomg | SO the from various other (Ree assisting in raising productivity, the standard of ving and conditions of workes seu) Susrantecing the loans raised by = 7 | : and indirect foans and the 4. Toarrange the loans or gurantees by in relation to | __ The Bank imposed a concltion that the total rect fi, nnes shat more useful and urgent small and age pn as nO | ‘Quarantees to a member country should not exceed 100 per cent of member countrys fist. | Subscribed capital, reserves and surplus. Bank folows the folowing contions in granting toans: Loans Conditions for granting loans : Ei Rive otto gang tans bythe bak fo ‘oe the borrower is unable to raise a loan under reasonable circumstances, Smoament of the member countries, The a tah intagy 7 ‘the loan is for reconstruction and/or development. fone" SOURIS. Bank has taken stone ye, me@Nt fr the reconstruction . When the member country ors central bank guarantees the repayment ofthe toons. to make sure of the end-use of tt Any 8 anon oral goverment a mente ary. ‘The bank grants fotows : 4. If competent committee recommends a loan inthe form of a writen project Power Secor" flows: | ro Transport Sector 30% of the total loans 30% of the total loans |Global Financial Syste, Global Financial System 5, In addition to providing direct loans, indirect loans and guaranteeing the jo, nm re ing .. Seeking to bring together IBRD provides the following facilities to its member countries. , Sey cults, ond ts halp center esa es ital, domestic and foreign, into productive ctve tothe flow of prhate Technical and Advisory Assistance ont investment in member countries. TBRD provides technical and advisory assistance to its member countries in addition assistance to Member Countries to financial assistance. Technical assistance includes : “FC provides financial assistance to large, medium and “Assessing the economic resources of the members and set up priorities to be | industries ‘of the member countries. Small-scale private sector followed in developmental programmes. It provides loans to different industries, viz, power, petrochemicals, miring, oll and 2. Sending Survey Missions to member countries to conduct satural gas exploration, telecom J 1 t pepades assistance to the private sector dsr n developing outs nthe fokowng ‘methods: national resources with a view to formulate policies for long-term ‘Economic Development Institute—The Bank has esta rotsirect Investment—IFC invests direc, eqity capt slong wth he pate Development Institute in order to provide training to the senior savers in eompaniesin developing countries. Is ivestmert shod rt be mae than developed countries. ino of the total capital of company. The imvetment by the IF er eos ‘commercial return. The assistance ofthe IFC woud be Sore crd Bonk has three afflates, viz, International Development Assocation, | development th recent International Finance Corporation and Mult-ateral Investment Guarantee Agency. used oer nachinery and equipment, meeting fon exchange eases jocal ‘All the members of the World Bank are eligi It has 185 members as on 3 January, 2008.™ INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) aoe oeeeert Asoc (DN oe ati Tn es ele Pa oP nn ati ect foe ai eto ra i “of the IBRD is the head of the IDA. Nel 5a IBRD. The president hair The EI oe oan mesa oe et eet Se eveepment france on easy terms to theless deve re ie asstanc pO | cae rnc cove to ess Ware Pas ee eal Brdeation inthe poorest counties. 2-1 gree re oon eae nS ie interest rates in order to promote economic sence baron OM SBI, ‘aise productivty and living standards in less developed countries, " ga eer, ea OH RT, PR Membership of the ‘prove promotional and avon SSMS. January 2008. fe Aw cnn nabs od et ye rrablshcrecity among vests. members, vi, Part I members members. Part | members: and Part I ee Pa ae etl mente ae he elo TERNATIONAL MONETARY FUND (IMP) aves Part IT members are the developing The ects a get Can an eee Organisation rt ee he ar tae A ye The organisation of the. eran pen a cae 1820 —— ee ee tte cee oe oe eae ove ‘Loans : Si nae he enw Pr par IDA toons UK’ nT A ay Pa 8 et preoared nemeanren tannin are mine Ls pop i garner ty one fe erator aie countries with per capita income of an borrow om misetaet ttre te ba geet Cee eee ee ee eee prices na is en mM econo wit tamer ne thong cna nom ich are not finances tc i en ern Pos po ‘trey rn eh neon eh sched oat Manet Fa ME) Oe promote Score ~ oomelen so dve to high population ant ne acre ne eke . erinerion—The prefect Shona, “expansion en ws le wn Conditions be financially and economicalY Soe ol re an woo omcienesene nn eect aes "The objecnes of the IMF ae ws tects of tn on a * (i) Interest Rate var 2210 to 0.5%. This is: waived now.. ... VEE FAT] 7A quota, In addtion tothe basic votes, member countn «ut of ORS 1.000. AS uch, we sa row cscs the ht * Quotas—The captal ofthe IMF which s represen Global Financiol System tate te acts alecated tte ee counties Genera : n «8 eof the subscription ofthe The quota Joan within 3105 Years. Members cn se ths can 5209 ewig re) tte member et CBE MN the poe of Prmerts poston. Ta, ed eras oon earn ras y and inion on current sccoure. Howes the reg Rh of the mente ety “S) Si wey cranny reese rn mre ane Srp coe cratic ae detemined on the ns ‘The shortfall of the member’ currency with Fad crm ct cat spereee rm teal came of the member nun ‘ranch The member our cn rw 27 ot rea tte me so and US dollar reserve ofthe the Fund. No interest ts charged on such crowing. ut ter meter — er cent of the average annual imports oy gt member country, repay such 1027s within 2 period of fve years ee (0) 20 er cent ofthe maximum variation nan meme Country, Credit Tranches—The remairing balance of cua, ster drawing 29% of sere de oe (,(, i) a by he ae meee trance scaled Cred ance Members hae a ie weapon ey ‘anual exports of national income, md Percentage ratios of from the credit tranche. Hence, drawing trom the credit tanche & condtanes Payment Method—At the time of the baie) member countries Can “aw upto 300 per cent ofthe new custo the ttl nen Mea 2% os aca te FEM the mete of the Fund’ resources. The cravings unde Buller Stock Prong Fay Execs $06 and US dolars whichever i les, 90d oF 10% of ts net oficial we Fund Facility, Supplementary Financing Faciity, Structural Adhstment Factity and counties. Following abe presents quotas of se 4) Compensatory and Contingency Fey ae exuded tom we aos an Selected runt ‘Approval of Stand-by Focty and Extend rancng Paty ae row chr the powers of Executive Boor. The Fund crested» ruber of cites oder to pe ‘member countries. Buffer Stock Faclty, Extended Fund Fey ec. The cans ener hee facies are ‘excluded from tranches and ae for longer perce. Now, we discuss the loans under these facies, brie. © Buffer Stock Facility—iMF crested buffer stock Francng Facity bx Fsancing buffer stock by member countries in 1969. The assistance was proved to the member ‘country equivalent to 30 per cent of is quota. ‘© The Extended Fund Facility—The Extended Fu Facty was proved in 1974 In order to provide credit to member countries to meet the balance of payment to 100 per cent of their quota. The duration of ths loan would be for 10 years. Ths oan in 1980 to ; . Y Provides foans to the poorer counties to sotve the probem of persstent balance Dayments problem and to carry out macro-economic ond stra euament Programmes. The IMF created ths facity with Special Drawing Rights (SOR) 2 ‘© Enhanced Structural Adjustment Fecility-in ore! to provide medium term france to the tow income countries, IMF created the Enhenced truce) Adbustent Facility with SDR 6 billion in December 1987. Eigible members recewe 2 great: realign the major currencies. er The agreement was broken in 1973 When US dot “ in SSORS are popularly known as "Paper Gold.” nas functions of these SDRs are almest identical with any domestic monetary ut. It thus becomes a unit of Int ‘medium of exchange and a store house d fea exchange gap between $27 billon and § 32 bilion and about 69 terest ra sm al os domestic pret. The questons now tobe coat postion ey pets foregn exchange gop particulary wien the forlgn 3! ‘5 very bleak, and to what extent could the SDRS be used to provde th system wa oma qopat Financial System es terested inthe reform ‘enhance their SDR holdings and drawing. The LDCS are not ofthe INF but they are not adequately represented an hence ther partition not proportion to their interest, need or strength. 7 Epo vaio rac we pean apes eha its report to the UN Economic Commission for Asia and Far East (ECAFE) to held at Weingonn Neh 1965.1 aso the bas f repo that n Are oe oe Mee Ot eve powers tothe Board of Orecors. The Board of Orecors Establishing the Asian Development Bank was drafted and adopted the se irr dla ere of whom seven belong to reir couies and ree no ‘Ministerial Conference on Asian Economic Cooperation at Mar loverber-Decen cents Ofen ere Board of Directors takes af decsions relating othe Ba. pases 1965. By January 1966, 33 countries had signed its Charter and the Asian Developm regional OU" and presents the accounts ofthe Bank tothe Board of Governor fr Bank was setup on 19 December 1966 with ts headquarters at Manila in the Phlippag| 1°27 wl certain functions which on the Board of Gover has pst Objectives ae: (2) entry f Ae pers) te ceacined ne Gere et oy are: members; (0) change me cme of the President “The aim for the establishment of Asean Development Bank was to supplement oon work of the World Bank in Asia Its bj pectves are: = To is 1. To pret pubic a pate ivesnet eso deopment he fo Financial ROT wen an nsterses otal 290i 2. To utilise the available resources for the financing of economic development. re er nin 1982, 0 1 tt SDP ae cars ‘achieve this, it gives priory to those regional and sub-regional and national projeds rae ain by reve COUTTIES. Te WSS ents resources fre the Bank ‘and programmes which contribute more effectively to the harmonious growth of te tre acres deposts fom ts spect ane entire region, especially of the smaller and less developed members of the region, arows trom the capital markets of He 3.7 f a provide technical assistance for the preparation, financing and implementaton ‘The ADB performs the fo8 we rondes fianclasetce the fm of 0S specific projects. tans, Tt give tree types of loans: Post Sa eae umber To cooperate with the United Nations and its bodies and subsidiaries, ncudng | loans. Project loans are given to sPeof oe eee more than oe set 2 tn partici, the ECAFE and other Intemational institutions and organisations and natin | relate projects in @ given sector ae bringing about certain chaNGeS entities in the investment of development funds in the region, relate to the implementation of a policy roe neserve 200 Spec FNS 6. To undertake all such activities and provide such services which may fulfil the “The Bank advances loans out of ts Orsay | cs ordinary capital reSOUrces OF above objectives. Reserve. The Ordinary Funds Reserve refer to the ‘or specific projects. These oF which direct tans are gen for develonment PIR Te sag of the cst of a a 's ene A ss | Seat Fies ae ‘Managed by a President, Ed a slongwfth 2” ecriistratve stat Vice-President, and a Board of Governors “Onkributes 10 its paid-in capital to these ‘tain. Germany, The Vice-President perfor, te ora eset the administrative head of the Bank oues een ten Paar courses sich 05 NRA fof Spedal La Guies of te Presiden is absence, Each membet Canad, Stead, Denar a, Pesan cons 6 FX haPr 86 Global Financial Sy, Feng min bY wots fe wal manber of GOTT of te tag, required. ‘The ADB grants loans on the basis of certain criteria. At the time of Franc ee cana te Bask consis te econo, ecg Corer er Sas 0 the gener cy ofthe concer county, fen pan a Sno anes, andthe capacty torre loans. In granting loans to the various wes of projets, the ADB Charter does toe dae ran, en the mink and mas its of ars are et to be decided by the Bank on merits and viability of the In short, the ADB sanctions for the following finance institutions on the guarantee of the enterprises on the government's guarantee: (3) to private enterprises inthe fom Sovran pot 2nd (5) to publ Secor enterprises for prvatiation wise ‘government guarantee, 3 chin asearch—One of thefunctons of ADB ste conduct suveye and | Ime ner fort pois rth nae oe | integration. Tt brings out an annual in Soataneneat wth which new and existing capital are ‘sed and incorporation of technological changes. The Bonk encourage aa gore oe bee $ ‘types of loans: 1) To developmen, government; (2) to small and meee | ot = Oe arama Monet nina a efiency. The Bank targets resources whe eo Nee oe ee PON {retetva® The ADB NW Bays more attention to human rsa” : oe Soe sub sil rd asteargowemceap eon Evaluation roe in providing fiance ithe orm of has been playing an important sa dans to Rs member developing counties er th evekgmert. Tree two factors for the increase in the Bank's lending operations. Fist, at the time of inthe | been! | ty I n, the Ban ere! to contre much (2) There have been rept Tees 8 Bank during the last few years from such countries as Fij, Malaysia a tan gry dean oan sanctions hae increased fromthe Asian Development Fd bat et rasan have been st, The Bank shoud untae sich messes wert fe increase. Despte be rons soinconaty the repens oy ao ‘counties of ‘stion has been creditable.es 38 ote ance Sn, goss vance ‘system THE UM CONFERENCE ON TRADE AND DEVELOPMENT (UNCray | gud Hons rane NcTAD expected to perform te following functions sal down by the oneal Asser ote international trade between countries with diferent 1 eal for accelerating the economic development a Lbes 8 multe principles and poles of international ede and related 3. mic development. Pobiems af econo xe proposals for putting the said principles and poles into effet and to 3.7 tens which may be relevant towards this end, be tae sch oy, to review and facitate the coordination of actives of other 4+ coer nthe elf terratona bode onl anenedtece wt as centre for harmonious trade related development poles of I economic groupings. i INCTAD sae ee cncrD at in cect ioe cmos meet, Organisation and enterprise development, macro np ne cree foe Seeman’ bad ofthe UN General Assembly wih tsheadquartes | franc, transpert, customs and information ecology, sell a TAD VII agreed upon anew organisational stutre !n operation since April 1992 t includes the folowing: MAD) Conference consisted of 188 members as on Ayal | ss ‘rade analysis and information sytem secret 2. Investment, Technology and Enterprise Development—U! member governments oe (O Topartipate more actively in itematonliestrent erating at the bisa Executive Committee—1 ‘composed of the permanent in Geneva. It meets periodi vane aa building, investment analysis capacty : developing sclence and technology reviews an TE, romating entrepreneurship and the developmen msieed Executive Committee of the Board which is ‘of member states deputed to the UNCTAD | rY month. LDCS refer to less developed or developing countiesFinancial. a Global, Sys inancial Syste ° al lop mutually benefcal relationships withthe international financial 2, Macroeconomic Policies, Debt and Development Financing UNCTAD hy, 3, To dev the member governments (in formulating policy analysis and research on issues concerning global. economic interdependence, te Iterations monetary andfancial system, and macroeconemg rote close working elatonship with the export development nd fancng ‘and development policy challenges. 5, Tof0"9 eral funding agencies and national trade and Investment promotion (Wl) In providing technical and advisory support. li) Providing computer-based debt management and fina ‘Specially designed to help countries manage their external debt. sport, Customs and Information Technology—UNCTAD helps mene, Negrated customs system that speeds up cistoms clearance procedures ang heb Goverment rela and moder theca procedres and managers oe Ai) Computerized cargo tracing system installed in 20 developing counties | global Networking ue In its global and national network of insttutonl and ee is quite uni and Asi, i) Buiding traning networks and trade enable developing countries to increase their compettivences ot ite and participate in debates on issues central to Inds international + ncial analysis system ‘and absorb mew developments in banking, export nancng and technical assistance to these needs, (W) Examining the links between development strategles and poverty reduction, {) Coordinating assistance to LDCS in their negotiations for accession tothe Wesld rane Orgeisaton, and in bung greater capacy for future trade negotiations, along ‘with capacity-bulding activities on trade and investment issues, financing exports and imports The Exim Bank is fully owned Board of Directors which has representatives from the Government, Recon ean of Jade, Export Credit Guarentee Corporation of Ini, afnancalinsttition puble sector. | banks, and the business community. ment om Puce tepaynesreooemaoae To the Of India and is mar a ‘agencies, and strengthen the Bank's policy “ et Rasen Bak perceptions and the export environment. Functional Organisation youps: "hes oct reseed a PEST Objectives 1. Overseas Investment Finance handles va pent by ieian companies. ‘The objectives of the Exim Bank are : ‘oat Oented Uns (EOUs), martes, nd oversees es or edt 2. To wansate national frig ade poles to conrete action pints 2. Project Finance/Trade Finance hands te eee O79 OO 2. Te Provide termatefnancng solitons tthe Idan exporter ce hm in Ne Teeats Such a supper’ credit, preshipment cats Wes Ege. efforts to be internationally competitive, ‘nance for export of projets and consultancy St. and value added ir services almed at investment promotion, Se feria 4 Aert-Business Group hasbeen putin place to spearhead thei and support Agr-exports. The Group handles projects and expert transactions. ‘agricultural sector for financing, ™ inthe ar fom these, there are the Support Services groups, which include: Plann Soh Sree Mr neta egal, Human Resources Management and Corporate fac ’ Financing Services Exim Bank offers a di tative to promote verse range of financing serves forthe Indian export, Including a variety of Export Credit facilities, and ri had inance for Export Oriented Companies’ Export Credits Exim Bank offers the following Export Credit faites, which can be availed of by nian companies, commercial banks and overseas entities, [EXIM Banks Range of Financing Programmes. For Commercial Banks Export ate reiscourting 2 Refinance of export supplier’) cred 3: Refinancing foreign currency preshipment crest Fig. : Scope of EXIM Bank's Financing Programmes A. For Indian Companies Executive Contracts Overseas t 1. Pre-shipment credit—Where the manufacturing cycle of the export contract ‘exceeds six months, Exim Bank’s Pre-shipment Credit facility provides access to finance at ‘the manufacturing stage—enabling exporters to purchase raw materials and other inputs. a ee il cre ‘of consultancy and technology services, saa cet tum end tem ced to onrsens present aude reoding personnel for rendering tecnica sevice tr eed Inowehow, preparation of project feasibly reports, maintenance : ih tran fctieinon connec at ees fi ‘ste qurntes to facia execiton of eer cnc ad ng ass, 6 Frtating—forfatng a oncng mehr bat ews cen net xd salto cash sale, on witout recourse! as an 8 sem the Indian exporter, enabling him to access the secs of an cversexs orig ing apencls,can aval of ek within India, but which are financed by multlterl funding at helping them meet cash ner the Bank's Finance for Deemed Exports fect flow deficits, 8. For Overseas Entities anova of Buyer credit from Exim Bank, fOr 1. Buyer's credit—Overseas buyers ‘tems. ents ‘POM of eligible goods from India on deferred pa of oct © OTe ian 2. Lines of credit—Exim Bank extends Lines enabling them to onlend fsttatons, foreign governments and thelr —— loans to finance import of eligible goods from i,on (610601 Financia! Syatep on roan? g capital Finance 9s spe res ct eed bythe fink Woes aoemeogny, |g WOHKIOB C2ts terme (ty 12 ym, ‘nominated by them or financial institutions overseas to enable buyers In those countries * ca Bo Trlp them meet thei working esi 5 yeas ! 2a oan compere to import capital/engineering goods, industrial manufactures and related services fron, an fe potently India on deferred payment terms. Ths faclty enables importers in those countries tg, facilities import from India on deferred credit terms as per the terms and conditions al other export product development —Exin aaa ean nek nd te oes opcy. Tm inn emer | (yrtatet Matomentc neti sao eee ‘obtain payment of eligible value from Exim Bank against negotiation of shipp to €OUS 0" Oo ards, and tohelp them mie bnhecrser| ob | mttaer den and conmeriste row pee | Sate rppplications. . Finance for Export Oriented Units (EOUs) mn OT a eaten rea a commie 0 idan Prefer Egat Cert SOU) tatntesay | option. neo company with a minimum ‘orientation of InNL f omen cqotomanre! ten oes epet ig ace Be fn rene cron ena nin tees to penette and rean es ee omnes res, 1. Project Finance weary in Geveloned COA: mrances bulk imparts of comune (i) For setting up EOUs—Exim Bank offers term loans for setting up new projects, (w) Import i paheobanertnete J rel _and for acquisition of assets for modernisation/ upgradation/expansion of existing units. canaksed items ay ea issues different | ipememene' ‘The Bank also extends 100 per cent refinance to commercial banks, for term loans (9) Guarantee fact ene anata oun od sanctioned by the lending bank to an EOU. ese nce: (2) export obligation 5 () Se soa.) For texte and jt ndusrien—The Bak ao evens tance ee a ortees in fxour of commerce banked ets oon mf ‘textile and jute industries under the Technology Upgradation Fund Scheme, 4 tebe te toward ter mnactrngfcies sto | ane between Indian and East Aan companies Unk the an (1) For software industry—The Bank offers a comprehensive fnancin/senvices countries Investment Partners Programe Backape for the software industry. These include projec/equipment finance, working ca jen venture projet V2, SEG sy, Po AO. RY ‘apa france, overseas investment fiance, besides support for obtaining product) sy, prototype development and technica, mano Pee nese ing, and export product development. term ans to software exporter fr etabsh -Official Sources of Finance _eimncmrmmnertamorcmtrcmmmtemnn | Naor Sources OFAN gy gyn cro ee ee aan each as he wteratna bart os ee NS AON (wv) For Indian companies involved in nt a nanan, ON tan companies inolved in pt development and relied thesecries market in which Eu =e: 98 cre ES ports/jetties, and for acquisition of fixed assets for stevedoring, cargo handi storage seed eoee : ‘and related activities like dry docks and ship breaking, i ea eer 2. Equipment Finance THER NAT ears et 07S () Finance for production equipment—To cater project a oem expenditure of £OUs Bm Ban ors» Ine of ee fo ashen fea tae ate rere ey re ES Dee en noe Primary domestic banks performing the N00 TEETET mang S (i) For vendors of EOUs Under the Export Vendor Development Finance tna they operated in foreign countries oD ye carey ote NO ae facility Exim Bank offers term loans to vendors of EOUs, to enable them to acquire ee aa oe ony vaan le . Plant and machinery and other assets required for increasing export capability.al rks emerged, that were dierent om ve ( wo banks and came to be Se short-term Euro-notes, Euro-commercal papers. The secuties marie began to {powona big Way aftr the international debt criss of earty 19605. Present hese ot is qute large. “The non-bank depasitors are mainly the corporate bodies. The deposts ieee oaretenes "Satan an eta oo & the Euro banks and offshore banking centres are nt subjected fo any regen: represent debt. In this case, the investor gets the not og Se eee ‘They are not required to make cash reserves rato with the central bank of the hes; | case of debt sees: company meernatona decides, ‘ountry. However, like domestic banks, international banks do maintain a reserve balance, crecadere for ere; S"2 Se eeeed nepomaee ‘They deposit such balances with the domestic banks or withthe parent bank, sSeakthe sen he ames oak hasan bak he cote, 2. Lending—intematonal banks nomaly prove oans aeasytermsaneondtens. | asset a5 under: Tetammbtatmertcmpstinay ete | LE tmnt mca castomers prefer to go toa bank whch ofthe own county. A lapanoce fe se (2) Company prepares prospectus etc, and takes = {2 zoproach a Japanese Bank. These banks attract other customers through offering miioty. on 257 terms. (W Ate getting permision,R deposts the shares be Sa on ‘Intenational bank loans are both short term and long term. Medium term loans are ‘ark ocated in the domestic country. The cestodan bank eens eo sraigbie fo 2 period of one to five years. (') The depository, located in foreign country, SSvs ‘Other Functions—interaional tanks perform folowing ational functions stares held oe (2) Prowsig face for power generation, telecommunicatons ete, The American deposhor issues Amercn pst ts (OS) SS (©) Hel foreign cempanies and Indian companies enter into joint ventures ‘postory in the international financial market ousie USA S55 (c) Managing and syndicating Euro-issues of debt and equity ofthe host countries. ‘sips (GDRs). proceeds (@) Managing cata and iefermaton systems by using atest echrokog, When GDRs are purchased by the estos he rors De (€) Help in bringing together Fs and companies inthe host county “Sms usodan bank and fom he cst Bat © es Tn ‘International Bonds—intemationa! borrowing Fores? | Off-shore Banking Centres fepgttmationa agencies, governments and oun AT ales By late 1960s, a ful-fledged eurocurrency market had been established as a global 2 SPeciied period of time. The issuer pays interest ‘money market where euro banks accepted deposits and lent funds in eurocurrency in 3 ‘otal, big way. The eurocurrency market got further boost in the 1970s, when a new type ofa jag Global) system Pianta | gyi Types of international bonde~There are diferent Peso such tongs Test Questions » ce They eat global fear siren Discuss the org, ) Foreign bonds and Euro bonds—There is a difference between | Monetary Fund. Phe, under thetw yf esmaterinates of Mule! Agee fr fang, 2 etn og (2) In case of foreign bonds, the issuer selects a foreign financial market wit wortd Bank, ADB, TFC] ” 5. nstore rm atonal Banks, Secures Mant tS bg, (Mee le of INF ba Bases, " functions and objectives : boas Oe in ts role in rotary ra 6 vat help the member counties inthe econ 1 we layed by IFC in developing eneries nteca ce 1989 ang f Desi the international equity ts procedure for isu. — *h bonds are being issued also by companies. The special features ‘ynat are debt securities? Explain the types of Intemational bonds that can be 2 sot ert notes onthe flowing: iL a asean Development Bank Sa cok of International Finance ral Agencies of Global Finance v1 ydr te veri sources In ble, of tema! rane, — ECP is issued by those companies ra en hdd hg need Meum term Euro-notes—These ar ust an extrton of short term EXO" — maturity renges between one year a seven years. These are not underwritten, These carry fixed rate of interest, although floating rates ore al