A Bank of America (BoA) study found that the average inflow into Indian bonds, equities, and loan vehicles increased 158.4% more than thrice the emerging world average of 40.3% as corporate investments was pegged at USD 19.3 billion in 2005. However, in actual dollar terms, India was behind China and South Korea.
BoA’s “Funding Corporate India Opportunities in International Financial Markets” says that deregulation and economic reforms permitting companies to tap international markets has seen a large flow. Investors find Indian companies attractive because of interest rate differential, hedging benefits, less documentation, faster approvals, greater flexibility, and greater visibility. Also banking reforms have allowed commercial banks to raise funds through debt market and large commercial banks such as the State Bank of India and ICICI Bank are planning to tap this source shortly. With these reforms, the study expects investment flow to India to increase next year.