The financial engineering process involves creating new instruments and techniques by unpackaging and rebundling the same characteristics in a different fashion to suit the ever changing needs of the issuers and investors. Foreign Currency Convertible Bonds are one of them, which provide the character of both debt and equity and create a win-win situation for both investor and issuer in current market situation.

Few years ago Global Depository Receipts(GDRs)/American Depository Receipts (ADRs), Foreign Currency Convertible Bonds (FCCBs), were mostly unknown abbreviations for Indian corporate. But the situation has completely changed now; financial market is known to be interlinked the world. The investors are looking for attractive rate of returns, and companies are looking for low cost financing compared to domestic market.

Indian financial sector joined the integration process after the financial sector reforms were initiated in 1991. The inflow and outflow of funds has transformed the way the Indian financial market functions. Liberalization process led to strong linkage between capital market and forex market. The process began with liberalizing the investment norms for nonresident Indians, persons of Indian origin and overseas corporate bodies; under the new policy they were freely allowed to invest in Indian equities without the prior permission of the Reserve Bank of India. Further, the Indian corporates were allowed to tap the global market by issue of GDRs, ADRs and FCCBs. Introduction of advanced technology in terms of screen-based trading system in foreign stock exchange and Indian stock exchange propped up cross-border investment and borrowings.

Treasury Management Magazine, Foreign Currency Convertible Bonds, FCCBs, Financial Engineering Process, Global Depository Receipts, GDRs, American Depository Receipts, ADRs, Domestic Markets, Financial Markets, Indian Financial Sector, Liberalization Process, Capital Markets, Forex Market, Cross-border Investments.