Indian companies are increasingly raising funds from overseas sources such as foreign banks, multilateral institutions, and international capital markets. There are multiple sources of overseas finance for Indian corporates including equity instruments like American Depository Receipts (ADRs) and Global Depository Receipts (GDRs), as well as debt instruments denominated in foreign currencies like US dollar-denominated Yankee bonds and Japanese yen-denominated Samurai bonds. While overseas financing provides benefits like lower interest rates, it also exposes companies to risks related to foreign exchange rates and the economic conditions in other countries. Strict regulations apply to overseas bond issuances to protect investors.

1. THE OVERSEAS OF FINANCE FOR
INDIAN CORPORATE
ABHISHEK BHADORIYA

2. FUNDING FROM ABROAD FOR INDIAN
CORPORATE
Indian corporates are increasingly tapping foreign capital to fund their ambitious Growth Plan. Also
raising finance from abroad is now more economically as interest rate is lower in International
market. India has widened its reach well beyond the country borders. Most companies in India are
now bigger in size than earlier and have seen a substantial improvement in their financial as well
and this has gine not unnoticed by the international financial community. Moreover most of the
Indian Market which is much more liquid and helps in better price.
India has been a capital deficient country since independence and raising a fund either by means of
equity or debt has always been problematic for Corporate and Industry. Major banks and financial
institutions are the first choice when raising debt funds from outside the country. Many commercial
banks in countries such as the US, Canada, the UK, Switzerland, Japan, China and Taiwan provide
funds to Indian businesses to finance their business needs. Institutions such as the World Bank,
the International Monetary Fund, the US International Development Finance Corporation and the
Asian Development Bank also fall into the category of lenders that fund Indian projects of
importance.

3. SOURCES OF FINANCE
There are multiple Overseas sources of finance for
Indian corporate. am Here I talking about Equity,
Debt, Foreign currency Loan.
• Companies around the world like to raise capital
abroad.
• Objective being :
1. EQUITY – ADR, GDR
2. DEBT – FX Denominated bonds like Yankee and
samurai bond
3. DEBT – INR Denominated bond like Masala Bond
4. Foreign Currency Loan – External Commercial
Borrowing
Foreign
Exchang
e Loan
DEBTEQUITY

4. EQUITY
DR is created when
foreign bank wishes to list
its already publicly traded
shares or debt securitieson
a foreign stock exchange.
Before it can be listed in a
particulcompanyar stock
exchange, company in
question will first have to
meet certain requirements
put forth by the exchange.
IPO can also issue a DR.
DR can be traded publicly
or over the counter.
EQUITY REPRESENTS THE VALUE THAT WOULD BE RETURNED TO A
COMPANY'S SHAREHOLDERS IF ALL OF THE ASSETS WERE
LIQUIDATED AND ALL OF THE COMPANY'S DEBTS WERE PAID OFF. ...
THE CALCULATION OF EQUITY IS A COMPANY'S TOTAL ASSETS
MINUS ITS TOTAL LIABILITIES, AND IS USED IN SEVERAL KEY
FINANCIAL RATIOS
DEPOSITARY RECEIPT
A depositary receipt trades on a local stock
exchange but the custodian bank in the foreign
country holds the actual shares. DR is a
physical certificate allow investor to hold shares
in equity of others shares. One of the most

5. AMERICAN DEPOSITORY RECEIPT
• American Depositary Service are a negotiable instrument
that represent owner of shares in a non-US Company.
• An ADR is a Stock of a Foreign Company which is listed on
the Following Stock Exchange in US.
• New York Stock Exchange (NYEX)
• American Stock Exchange (AMEX)
• NASDAQ
• ADRs Carry prices in US Dollar, pay dividend in US Dollar and
can be traded like the share of US Based Companies.
• ADRs are Dollar Denominated securities that trade clear and
settle like any other US Security.

6. ADRs
• Avoid inconvenience cross border & cross
Currency transaction.
• ADRs Do not eliminate the currency and
economy Risk
• Securities of a foreign Company that are
represented by an ADR are called American
Depositary Shares.
• For an ADR issue to become a listed and
trade on a major US exchange, It must be
sponsored by the underlying corporation. If
not, ADR is likely to be traded over the
counter.
New york
Stock
Exchange
American Stock
Exchange
NASD
AQ

7. TYPES OF ADRs & RISK INVOLVED
RISK INVOLVED –
• Political Risk
• Exchange Rate
Risk
• Inflationary Risk

8. GLOBAL DEPOSITARY RECEIPT
• Beyond the ADR there is a second category of DR. A GDRs represent a bank certificate issued in
more than one country of shares in a foreign company.
• The term GDRs is used throughout the globe and designates any foreign firm that trade on an
exchange outside its home Country.
• The basic advantage of GDRs as compared to ADRs is that they allow the issuer to raise capital on
two or more market simultaneously which increases his share holder base.
• Listed on.
• London Stock Exchange
• Luxembourg stock Exchange
• Frankfurt Stock Exchange
• London Stock Exchange Dominates

9. GDRs
• Other Exchange which will list GDRs include
• Dubai international financial exchange
• Singapore stock exchange
• Hong Kong stock exchange
• They are also known as
• European Depositary Receipt
• International Depositary Receipt
• Either issued in US Currency or in the currency of the country the GDR listed in.
• Several International bank issued GDR such as JP Morgan Chase, Citigroup, Deutsche
Bank, Bank of New York.
• There are two types of Global Depositary Receipt – 1) Reg s Depositary Receipt
2) Pairing Type

10. Guidelines of ADR and GDR issues by the
Indian Companies.
• Divestment of share holders of their holdings of the Indian Companies in the
overseas market would be allowed through the mechanism of sponsored
ADR/GDR issue in respect of :-
• Divestment by share holders of their holding of Indian
Companies listed in India.
• Divestment by share holders of their holding of Indian
Companies is not listed in India but which are listed in overseas.
• Such a facility would be available of pari-passu to all categories of share holder of
the company whose shares are being sold are in the ADR/GDR marker Overseas.
This would be ensure that no class of share holder get a special dispensation.
• Proposal for Divestment of existing shares in the ADR/GDR market would have to
be approved by a special resolution of the company whose shares are being
divested.

11. GUIDELINES OF ADR & GDR
ISSUES BY INDIAN COMPANIES
• Proceeds of the ADR/GDR is raised abroad shall be repatriated into India
within a period of one month of the closure of Issue.
• Divestment of existing shares of Indian Companies in the overseas market
for issue of ADRs/GDRs would be reckoned as FDI such proposal require
FIPB approval as also other approval, if any under FDI policy.
• Such divestment inducting foreign equity would also need to confirm to
FDI Sectorial Policy and the prescribed sectorial cap as applicable.
According to the facility would not be available where the company whose
shares are to be divested is engaged in an activity where FDI is not
permitted.
• Each case would require the approval of FIFB for equity Induction through
offer of existing shares under the ADR/GDR Route.

12. DEBT
(foreign exchange denominated bond like yankee & samurai Bond)
What Is a Yankee Bond?
A Yankee bond is a debt obligation issued by a foreign entity, such as a
government or company, which is traded in the United States and
denominated in U.S. dollars.
KEY TAKEAWAYS
A Yankee bond is a debt obligation denominated in U.S. dollars that is publicly
issued in the U.S. by foreign banks and corporation, and sometimes even
governments.
Yankee bonds are subject to U.S. securities laws, as they trade on U.S.
exchanges.
Yankee bonds offer the issuer to chance to get cheaper financing and reach a
broader investment audience; they offer investors the chance for better yields.
On the downside, Yankee bonds can take a long time to come to market,
subjecting them to interest rate risk; they are also vulnerable to currency risk
and other problems in their home country's economy.
YANKEE
BOND

13. UNDERSTANDING OF
YANKEE BOND
Yankee bonds are governed by
the Securities Act of 1933,
which requires the bonds to be
registered with the Securities
and Exchange Commission
(SEC) before being offered for
sale. Yankee bonds are
frequently issued in tranches,
individual portions of a larger
debt offering or structured
financing arrangement that
have differing risk levels,
interest rates and maturities,
and offerings may be extremely
large, as much as $1 billion.

14. ADVANTAGES
Yankee bonds can represent a win-win opportunity
for both issuers and investors. One of the primary
potential advantages for a Yankee bond issuer is the
opportunity to obtain cheaper financing capital at a
lower cost if comparable bond rates in the United
States are significantly lower than the current rates
in a foreign company’s own country. The size of the
U.S. bond market and the fact U.S.
investors very actively trade it also confers an
advantage for the issuer, especially if the bond
offering is a large one. Although U.S. regulatory
requirements may initially hamper a foreign issuer
in regard to obtaining approval to offer bonds,
conditions for lending in the United States may still
be less stringent overall than those in the issuer’s
own country, allowing the issuer greater flexibility
in terms of the offering.
One of the drawbacks of Yankee bonds for issuers is
the time involved. Because of strict U.S. regulations
for the issuing of such bonds, it can take more than
three months for a Yankee bond issue to be
approved for sale. The approval process includes an
evaluation of the issuer’s creditworthiness by a
debt-rating agency such as Moody’s or Standard &
Poor’s
Yankee bond can be affected by the economy of its
home country. So if that country has a shaky
economy, its price could topple, or the issuer could
run into problems—which could affect its coupon
payments. And while the Yankee bond is issued in
dollars, it could be vulnerable to some currency risk
as well, as a nation's economic woes often affect its
money's performance in the foreign exchange
markets.
DISADVANTAGES

15. SAMURAI BOND
What Is a Samurai Bond?
A samurai bond is a yen-denominated bond issued in Tokyo by a non-
Japanese company and subject to Japanese regulations. Other types of
yen-denominated bonds are Euro yens issued in countries other than
Japan, typically in London.
KEY TAKEAWAYS
Samurai bonds are issued in Japan by foreign companies, denominated in
yen, and subject to Japanese regulations.
Companies might issue bonds in yen to capitalize on low Japanese
interest rates, or to gain exposure to Japanese markets and investors.
Risks associated with raising capital in Japanese yen can often be
mitigated with cross-currency swaps and currency forwards.
Shogun bonds, like Samurai bonds, are bonds issued in Japan by foreign
firms, but unlike Samurai bonds are denominated in non-yen currencies.
How Does
It Works?
A company may choose to enter a foreign market if
it believes that it would get attractive interest rates
in this market or if it has a need for foreign
currency. When a company decides to tap into a
foreign market, it can do so by issuing foreign
bonds, which are bonds denominated in the
currency of the intended market.
Simply put, a foreign bond is issued in a domestic
market by a foreign issuer in the currency of the
domestic country. Foreign bonds are mainly used to
provide corporate or sovereign issuers with access
to another capital market outside their domestic
market to raise capital.

16. BENEFITS OF SAMURAI BOND
• Samurai bonds are denominated in Japanese
yen. Thus, Samurai bonds give a company or
government an opportunity to expand into
the Japanese market without the currency
risks normally associated with a foreign
investment since the bonds are issued in yen.
• The bonds are subject to Japanese bond
regulations, attracting investors from Japan
and providing capital to foreign issuers. Since
investors bear no currency risk from holding
these bonds, Samurai bonds are attractive
investment opportunities for Japanese
investors.

17. MASALA BOND
Indian curry took the world by storm and replaced
fish and chips to become the No.1 favorite dish of
the UK. With PM’s visit in 2016 to the UK to harness
funds and a step in making UK a preferred
investment partner of India and a favored
destination to attract investors; these bonds
primarily registered in London Stock Exchange got
their name ‘The Masala Bond’.
There are other similar Foreign Currency
Denomination Bonds like the Dim Sum in China and
the Samurai Bond in Japan.
The peculiar term was first used by The
International Finance Corporation (IFC) – a World
Bank affiliate, the first major issuer of these bonds,
to give it a strong Indian ting.

18. WHAT ARE MASALA
BOND
SUCCESS STORIES OF
MASALA BOND
Masala bonds are bonds issued
outside India where Indian
entities can raise money from the
overseas market in rupees (and
not foreign currency).
This has eased the situation
where Indian companies had to
earlier depend only on External
Commercial Borrowings (ECB)
that were Raised and Repaid in
dollars only.
There are many recent trends pointing
precisely towards this direction as the
bonds went more than 4 times
oversubscribed soon after its listing in the
UK. Thus, paving the way for Masala Bonds
to enter the global market.
The Indian Railway Finance Corporation
raised $1 Billion followed by the NTPC
issuing the first corporate green masala
bonds worth Rs 2,000 Crore.
HDFC Bank also became the first Indian
company to raise Rs. 3000 Crores from
Masala bonds.

19. FOREIGN CURRENCY LOAN
A foreign currency loan is actually a speculative deal. The borrower hopes for
interest and exchange rate advantages. But that is a risky bet.
A foreign currency loan means that you borrow money in a foreign currency, for
example Swiss francs, and you have to repay the loan in this currency as well.
In practice, this is what happens: The bank obtains the loan sum in francs from a
Swiss bank, converts it into euros and pays it out to the borrower. To repay the
loan plus interest, the borrower gives the bank euros, which it converts into
francs and transfers to the Swiss bank.
If you are a lucky borrower, a foreign currency loan may still cost you less than
a normal loan in euros, despite the rather high fees and charges involved. That is
because interest rates vary between different currencies.

20. EXTERNAL COMMERCIAL BORROWING
External commercial borrowing (ECBs) are loans in India made by non-resident lenders in
foreign currency to Indian borrowers.
They are used widely in India to facilitate access to foreign money by Indian corporations and
PSUs (public sector undertakings).
ECBs include commercial bank loans, buyers' credit, suppliers' credit, securitized instruments
such as floating rate notes and fixed rate bonds etc., credit from official export credit agencies
and commercial borrowings from the private sector window of multilateral financial
Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc.
ECBs cannot be used for investment in stock market or speculation in real estate.
The DEA (Department of Economic Affairs), Ministry of Finance, Government of India along
with Reserve Bank of India, monitors and regulates ECB guidelines and policies.
Most of these loans are provided by foreign commercial banks and other institutions

21. CONCLUSION
•
• Many countries use their own currencies. Therefore, we must understand how the currencies
compare with each other.
• Moreover, we should also have a good understanding of how these goods are paid for and what is
the determining factor of the prices that the currencies trade at.
• International trade is one of the most important factors of growth and prosperity of participating
economies.
• Its importance has got magnified many times due to globalization. Moreover, the resurgence of
the US from being the biggest international creditor to become the largest international debtor is
an important issue.
• These issues are a part of international macroeconomics, which is popularly known as
international finance.

22. THANK
YOU