BANKING AFFAIRS

Detailed explanation-1: -The purchase of shares and bonds of Indian companies by Foreign Institutional Investors is called Foreign Indirect Investment.

Detailed explanation-2: -Foreign Direct Investment (FDI) is the investment through capital instruments by a person resident outside India (a) in an unlisted Indian company; or (b) in 10 percent or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company.

Detailed explanation-3: -GDRs are equity representing share-holders funds, foreign investment in the form of equity shares issued outside India by a Depository Bank, on behalf of an Indian company which is covered under the FDI policy. GDR proceeds are reckoned as Foreign Direct Investment. So, 3 is correct.

Detailed explanation-4: -Foreign institutional investors can include pension funds, investment banks, hedge funds, and mutual funds.

Detailed explanation-5: -Investment by foreign investors in buying new land, machinery, setting up factories for business purpose can be termed as Foreign Direct Investment. Q. Which of the following can be considered as Foreign Direct Investment made in India?