Foreign Investment In Stock Market Foreign investment in stock market is the investment made by foreign nationals/companies who are

also known as foreign institutional investors (FIIs). Normally foreign investment in India comes through hedge funds, global banks, high net worth individuals etc. The Indian stock market is heavily dependent upon foreign investors as the average Indian home prefers to invest in real estate and gold rather than in the stock market and the capital available to Indian funds is comparatively lesser. Investment decisions of retail investors in India normally do not lead to significant price swings in the stock market. Thus any kind of inflow or outflow of capital from the stock market coming from outside India has a significant impact on the stock market index. Hawala Route Wikipedia defines Hawala as, an informal value transfer system based on the performance and honour of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and the Indian subcontinent. It is basically a parallel or alternative remittance system that exists or operates outside of, or parallel to traditional banking or financial channels. Simply speaking, the Hawala Route is a money transfer system which operates outside the circle of banks and other financial institutions which involves the transferring of money without any physical movement of cash and better exchange rates when compared to the official ones. As they are not routed through banks they do not come under any kind of regulation. It is used extensively across the globe to circulate black money and to provide funds for terrorism, drug trafficking and other illegal activities and is also used to transfer unaccounted income. How it works? Hawala system works with a network of operators called Hawaldars or Hawala Dealers. A person willing to transfer money, contacts a Hawala operator at the

source location. The Hawala operator at that end collects the money from that person who wishes to make a transfer. He then calls upon his counterpart or the other Hawala operator at the destination place/country was the transfer has to be made. Now the hawala operator at the tranferees end, hands over the cash to the intended recipient after deducting a certain amount of commission. (Source: http://www.n2moneymatters.com/2011/03/what-is-hawala-all-youwant-to-know.html) Money laundering You bribe someone here, you bribe someone there, and you pay a friendly banker to help you bring the money back. The above quote was made by Pablo Escobar, who was a billionaire drug dealer. Money laundering was central to his business and he is known to be part of some of the biggest money laundering scams ever heard of. It has been said that at one point Pablo Escobar was so rich he spent $1,000 a week on rubber bands in order to wrap his bundles of cash. Money laundering is a process of making money appear to have been earned from a legal source instead of an illegal source from which it has been actually earned. Around $500 billion of black money is made into white by money laundering annually. Money laundering is rampant even in the corporate world. Today even renowned banks like HSBC face allegations of money laundering and has to pay a fine pf $1.9 billion as money laundering penalties. Offshore bank accounts The main reason high net worth individuals open offshore bank accounts is that it enables a way of having part of their wealth outside of their home country, so that they will never risk having the government freeze or confiscate all their assets. Countries where wealthy individuals prefer opening offshore bank accounts are also called tax-havens as they help them avoid tax and also details regarding the bank accounts are kept secret and are not be disclosed to any

party. In some of these tax havens, the bank officials that break the secrecy law face imprisonment. Countries which are home to a lot of offshore bank accounts are: 1. 2. 3. 4. 5. Switzerland Luxembourg Cayman Islands (British Overseas Territory) Singapore Belgium

Punitive Actions It is the action taken by a business customer against a supplier who fails to fulfil the terms of an agreement. Late delivery of goods is a common example of the type of problem that would prompt a customer to take punitive action. Punishment might consist of charge-backs, order cancellation, the threat of contract cancellation, or other measures in order to motivate the supplier to correct the problem.