“A penny saved is a penny earned”… or so the old proverb goes. Of course, the value of a penny has changed somewhat from the time when your mother offered her wisdom on the value of keeping what you earn. Today, you could save thousands of dollars by simply making the right mortgage decision. If you’re like most Canadian homeowners, your mortgage is a goldmine of potential savings.

In the past few articles, we’ve talked about the importance of your mortgage as one of your most significant financial decisions. We’ve explored the value of seeking the advice of a mortgage professional -whether you’re buying a home or renewing an existing mortgage.

Today, let’s take a look at the bottom line: the savings you can enjoy by making the right mortgage decisions.

It is the primary role of a mortgage broker to find you the right product for your personal situation. A mortgage broker is a financial professional and – like your investment advisor – he or she will want to understand your personal situation and payment preferences. Your mortgage broker has access to a broad spectrum of lending institutions, so you can do some valuable comparison shopping for the right combination of features, rates and mortgage options.

All these choices offer you substantial opportunities to save money over the life of your mortgage.

If you are like most homeowners, you are focused -for good reason – on finding the best possible rate for your mortgage. Your mortgage broker can offer you the best range of rate options and terms. If a mortgage broker can get you one per cent off the posted rate, that could translate into more than $13,000 in interest per $100,000 borrowed over a 25-year amortization schedule. If, however, you believe that most mortgage rates are basically the same from one institution to the next, then consider the fact that even an eighth of a point difference in the rate can offer significant savings over the duration of your mortgage.

But it’s also important to look beyond the rate. There are other ways to find savings in your mortgage. Your mortgage broker is up-to-date on market trends and new opportunities… as well as some of the tried-and-true ways to save money in a mortgage.

Do you get an annual bonus in your job? You may want to use that bonus to pay down the principal of your mortgage. If you pursue this strategy consistently over the life of your mortgage, you could save thousands of dollars in interest by paying your mortgage off sooner.

Are you paid bi-weekly or bi-monthly? Consider a change from the usual monthly mortgage payment. Set up your mortgage payment schedule to coincide with your pay period. Again, you can shave years off your mortgage, and enjoy thousands of dollars in savings.

In the coming weeks, we’ll look at some of these savings opportunities in more detail. In the meantime, consider the old penny proverb again. How much is your time worth? Time savings is one of the key, unexpected benefits that clients say they have enjoyed when they choose to work with a mortgage broker. Above all, a mortgage broker is an expert in customer service, and that means that your broker looks after every detail of your mortgage research and negotiations on your behalf.

Mortgage brokers are blossoming in the current environment and are gaining an increasing share of the mortgage market. This is great news because you should consult with a mortgage professional when you’re making one of the most important financial decisions of your life. But, keep in mind, that not all mortgage brokers have the same level of training and experience.

That’s why it’s such great news for Canadians that the mortgage industry now has national accreditation: the Accredited Mortgage Professional (AMP). When you meet with a mortgage broker with an AMP, you’ll be assured that your business is in the hands of a professional.

Canadians are accustomed to purchasing financial products like investments and insurance from an accredited professional. Now they can look for a similar professional designation from their mortgage expert.

Like similar accreditation programs for mutual fund sales people, or stock brokers, the AMP is designed to ensure an appropriate level of training and experience. Mortgage professionals from every field are eligible to acquire the accreditation: from mortgage brokers on the front lines to those who specialize in lending or mortgage insurance, for example.

While the vast majority of Ontario mortgage brokers take seriously the important responsibility that they have to their clients, the designation provides mortgage customers with a tool to help select their mortgage expert. This kind of designation is especially valuable in an industry where provincial regulations vary – and so a variety of practice standards are in place. A single national proficiency standard brings mortgage brokers in line with other financial professionals.

The AMP designation can now offer you confidence that your mortgage broker has industry experience, has taken ethics and industry training, and is committed to a program of ongoing education to retain their designation. In order to qualify for the designation, mortgage professionals must have at least five years experience or successfully complete a recognized mortgage professional proficiency course, and take an ethics training course. They must also commit to a minimum 10 hours of continuing education each year, and agree to be governed by the professional code of the national CIMBL organization.

With a growing number of Canadians now seeking the services of independent mortgage brokers to help them assess their mortgage options – in a $600 billion industry – the timing is perfect. It’s your money, after all, and you should have the tools to make the best possible decision. An independent mortgage broker can offer you the broadest range of mortgage rates and options. Now they can also offer you the added assurance of their newly minted designation: the AMP.

INTRODUCTION

One of the outstanding features of globalization in the financial services industry is the increased access provided to non-local investors in several major stock markets of the world. Increasingly, stock markets from emerging markets permit institutional investors to trade in their domestic markets. Indian stock market opened to Foreign Institutional Investors in 14th September 1992, initially with lot of restrictions. The regulation on them are liberalized and minimized now, since 1993 has received a considerable amount of portfolio investment from foreigners in the form if FIIs investment in equities. This has become a turning point of India stock market. The government of India announced the policy of the government to permit the FII investment in India capital market. According to the SEBI modified the regulation on 14-11-1995. In order to make investment in India equity market they wanted to register with Security Exchange Board of India as foreign institutional investors. It is possible for foreigners to trade in India securities without registering as Foreign Institutional investors, but such cases require approval from Reserve Bank of India or the Foreign Institutional Promotion Board. They are generally concentrated in secondary market.

Domestic market alone not able to meet the growing capital requirement of the country and financing from mutilated institution has lost primary in the emerging in the global order .Besides aimed primarily at ensuring non-debt creating capital inflows at a time of extreme balance of payment crisis. It was to tie over the balance of payment crisis in the early 1990s

Portfolio flows often referred to as ‘hot- money’ are notoriously volatile capital flows. They have also responsible for spreading financial crisis causing contagion in international market. Evan though, the FIIs have been plying a key role in the financial markets since their entry into this country. The explosive portfolio flow by FII brings with them great advantages as they are engine of growth, lowering cost of capital in many emerging market. This opening up of capital markets in emerging market countries has been perceived as beneficial by some researchers while others are concerned about possible adverse consequences.

Clark and Berko (1997) emphasize the beneficial effects of allowing foreigners to trade in stock markets and outline the “base-broadening” hypothesis. The perceived advantages of base-broadening arise from an increase in the investor base and the consequent reduction in risk premium due to risk sharing. Other researchers and policy makers are more concerned about the attendant risks associated with the trading activities of foreign investors. They are particularly concerned about the herding behavior of foreign institutions and the potential destabilization of emerging stock markets.

This study addresses these issues in the context of foreign institutional investors’ (FII) trading activities in a big emerging market – India. India liberalized its financial markets and allowed FIIs to participate in their domestic markets in 1992. Ostensibly, this opening up resulted in a number of positive effects. First, the stock exchanges were forced to improve the quality of their trading and settlement procedures in accordance with the best practices of the world. Second, the information environment in India improved with the advent of major international financial institutional investors in India. On the negative side we need to consider potential destabilization as a result of the trading activity of foreign institutional investors. This is especially important in an emerging country that has embarked upon reforms to open up its market.

OBJECTIVES The objectives of this study were as follows;

(1) To study the role of FII investment in the Indian stock market, ( 2 ) To examine the causal relationship between net FII investment and BSE sensex using granger causality test (3) To examine the causal relationship between net FII investment and NSE sensex using granger causality test (4 )To examine whether FIIs were a channel of global disturbance into the Indian stock market.

TOOLS: Study was carried out with the help of unit root test, co integration test, causal regression and F statistics for FII investment and index from BSE and NSE

LETERATURE REVIEWS

Gayathri Devi .R in 2003, she conducted study on “Causal Relationship between FIIs and Stock Market: A critical study”. It revealed that there was long run relationship between net FII investment and sensex, FII investment did not respond the short-run changes or technical-position of the market and they were more driven by fundamentals, and FII investments did granger cause India stock market. “Selen Serisoy Guerin” in 2006, conducted study on “The Role of Geography in Financial and Economic Integration: A comparative Analysis of foreign direct investment, Trade and Portfolio Investment Flows”.. It found support for the argument that most FDI among Industrial countries were horizontal, whereas most FDI investment in developing countries was vertical and our results indicated that portfolio investment flows compared to FDI, were highly sensitive to change in GDP per capita, this implied that if there was a negative output stock, portfolio investment flows would be more volatile than FDI. A.Julia Priya, D. Lazar and Joseph Jeyapual in 2005, they conducted study on “Role of Foreign Institutional Investors on stock market development in India”, Results revealed that sensex, market capitalization of NSE, Turnover of BSE and NIFTY without market capitalizations were influenced by Foreign Institutional Investors“Suchismita Bose and Dipankor coondoo” in 2004, they conducted study on “The Impact of FII Regulation in India”,. These results strongly suggested The liberalization policies had the desired expansionary effect and had either increased the mean level of FII inflows and/or the sensitivity of these flows to a change in BSE returns and /or the Parthapratim pal in 2004 conducted study entitled as “Recent volatility in stock markets in India and foreign institutional investors. Findings of this study indicated that Foreign institutional investors had emerged as the most dominant investor group in the domestic stock market in India. Particularly, in the companies that constitute the Bombay stock market sensitivity index, their level of control was very highinertia of these flows.

“sandhya Ananthanaryanan, Chandrasekhar krishnamurthi and Nilajan Sen in 2003 conducted study as “Foreign institutional Investors and Security Returns: Evidence from Indian Stock Exchanges”, It found strong evidence consistent with the base-broadening hypothesis.It did not find compelling confirmation regarding momentum or contrarian strategies being employed by FIIs.It supported price pressure hypothesis.

It did not find any substantiation to the claim that foreigner’ destabilize the market. J.S. Pasricha and Umesh.C.Singh in 2001, tried to analyze the impact of FIIs investment on Indian capital market. Their study revealed that FII are here to stay and have become the integral part of Indian capital market. Their entry has led to greater institutionalization of the market. They have brought transparency in the market operations.S.S.S. Kumar in 2001, attempted in his study to find the effect of FIIs on the Indian stock market. The inference analysis of the paper suggests that FII investments are more driven by market fundamentals rather than by short term changers or technical position of the market. As per K. Seethapathi and V. Subbulakshmi study entitled “Foreign investment: Need for focus”, They concluded that, the flows have to pick up. The political will is to be demonstrated by the government. In addition, the regulators have to identify the reasons for failure in converting approvals into actual investments and those issues are to be addressed immediately. E. Han Kim and Vijay Singal in 1997, they conducted study entitled “Are open market Good for Foreign Investors and Emerging Nations?”, Conclusion revealed as. Integrating the emerging stock markets into world markets has had benefits, and will continue to have benefits for both global investor and host countries. The end result of integrated markets a better allocation of resources, improved productivity of capital, and a higher standard of living.

THEORETICAL REVIEW

Between late 1990 and the middle of 1991, the economy faced severe balance of payment difficulties, coming close to defaulting on its external payment obligations in January and June of 1991. In January 1991, the Government negotiated with the International Monetary Fund (IMF) for loans. What followed was the implementation of the conventional IMF-World Bank prescription of short-term ‘stabilization’, consisting of devaluation, temporary import compression, fiscal and monetary compression with a rise in interest rates, followed by more long-term ‘structural adjustment’ measures, seeking to restructure the domestic economy.

The New Economic Policy was an outcome of implementation of the ‘structural adjustment’ program. The ‘economic reforms’ or ‘economic liberalization’ program, which began to be implemented with the announcement of the New Economic Policy (NEP), included wide-ranging changes in industrial policy, trade policy and foreign investment policy, a redefinition of the role of the public sector in the economy and redesigning the architecture of the domestic financial system. By narrowing down the topic, first it concentrates on capital account liberalization.

CAPITAL ACCOUNT LIBERALIZATION

The process of capital account liberalization in India needs to be situated in its wider context, for it was shaped by the reality in the national context and the conjuncture in the international context. In response to the external debt crisis, which surfaced in 1991, the government set in motion a process of stabilization, adjustment and reform. Economic liberalization and structural reforms sought to increase the degree of openness of the economy through trade flows, investment flows, technology flows and capital flows. The process began the introduction of convertibility on trade as quantitative restrictions on imports, except for with consumer goods were dismantled and tariff levels were reduced. It was combined with a liberalization of the regimes for foreign investment and foreign technology. And restrictions on international economic transactions, including capital movements, were progressively reduced. This process was also influenced by the gathering momentum of globalization which was associated with increasing economic openness in trade flows, investment flows and financial flows.

The approach to capital account liberalization in India was much more cautious. What was liberalized was specified. Everything else remained restricted or prohibited. The contours of liberalization of the capital account were, in large part, shaped by the salutary lessons of the external debt crisis which surfaced in early 1991 and brought India close to default in meetings its international obligations. The balance of payments situation, then, was almost unmanageable.

The vulnerability was accentuated by two factors: it became exceedingly difficult to roll-over short-term debt in international capital markets and there was capital flight in the form of withdrawals from deposits held by non-resident Indians. This experience dictated the parameters of capital account liberalization8. It prompted strict regulation of external commercial borrowing especially short-term debt. It led to a systematic effort to discourage volatile capital flows associated with repatriable non-resident deposits. Most important, perhaps, it was responsible for the change in emphasis and the shift in preference from debt creating capital flows to non-debt creating capital flows. To some extent, the liberalization that was introduced was also influenced by the perceived needs of the economy: financing the current account deficit, mobilizing resources for investment and attracting international firms. But capital account convertibility remained, fortunately, in the realm of rhetoric. The Mexican crisis in late 1994 was, ironically enough, a blessing in disguise for India. It was not just an early warning signal. It dampened the enthusiasm of those who advocated capital account liberalization with a big bang. It lent support to those who questioned the wisdom of capital account convertibility that would have been premature in every sense. The contours of capital account liberalization in India were determined by these factors.

In sketching these contours, it is necessary to distinguish between different forms of private capital inflows and outflows, as there are important differences between these categories in the nature and the degree of liberalization. A complete description would mean too much of a digression. For our purpose, it would suffice to consider the contours of liberalization in the following categories of capital account transactions:

• Direct investment,

• Portfolio investment, and

• Non-resident deposits.

Foreign Direct Investment

It is defined as a long-term investment by a foreign direct investor in an enterprise resident in an economy other than that in which the foreign direct investor is based. The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a transnational corporation (TNC). In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate.

The liberalization of the policy regime for direct foreign investment began in July 1991 with two major decisions. First, direct foreign investment with up to 51 per cent equity was to receive automatic approval in selected high priority industries subject only to a registration procedure with the Reserve Bank of India. Second, a Foreign Investment Promotion Board was constituted to consider all other proposals for direct foreign investment where approval was not constrained by pre-determined parameters and procedures. In effect, this created a dual route for inflows of direct foreign investment. The approval was automatic, within the specific parameters, from the Reserve Bank of India, while all other inflows were subject to approval through the Foreign Investment Promotion Board. The access through the automatic route has been progressively enlarged over time. Needless to add, outflows associated with direct foreign investment are not subject to any restrictions, but this was so even in the era of capital controls.

Foreign Portfolio Investment (FPI)

Portfolio investment represents passive holdings of securities such as foreign stocks, bonds, or other financial assets, none of which entails active management or control of the securities’ issuer by the investor; where such control exists, it is known as foreign direct investment.

The liberalization of the policy regime was extended to portfolio investment in September1992. To begin with, foreign institutional investors such as pension funds or mutual funds were allowed to invest in the domestic capital market subject simply to registration with the Securities and Exchange Board of India. Guidelines issued by the Reserve Bank of India permitted such foreign institutional investors to invest in the secondary market for equity subject to a ceiling of 5per cent (subsequently raised to 10 per cent) for individual foreign institutional investors in a single Indian firm with an overall limit at 24 per cent of equity (later relaxed to 30 per cent of equity at the option of the firm) for total foreign institutional investment in a single Indian firm. Foreign portfolio investment further classified into

1. FIIs

2. ADR/GDR, and

3. Offshore funds.

Foreign institutional investors (FIIs)

One who propose to invest their proprietary funds or on behalf of “broad based” funds or of foreign corporates and individuals and belong to any of the under given categories can be registered for FII.

• Pension Funds

• Mutual Funds

• Investment Trust

• Insurance or reinsurance companies

• Endowment Funds

• University Funds

• Foundations or Charitable Trusts or Charitable Societies who propose to invest on their own behalf, and

• Asset Management Companies

• Nominee Companies

• Institutional Portfolio Managers

• Trustees

• Power of Attorney Holders

• Bank

Access was provided to foreign institutional investors in the secondary market for debt. Soon thereafter, foreign institutional investors were also allowed investment or placement in the primary market, subject to approval from the Reserve Bank of India, with a maximum limit of 15per cent of the new issue. It was some time before foreign institutional investors were permitted investment in government securities in the primary and secondary markets. This came in 1996-97 and was subject to the ceiling for external commercial borrowing. Subsequently, in 1998-99, foreign institutional investors were also permitted to invest in treasury-bills. There is no reserve requirements stipulated for, or taxes imposed on, these capital inflows. It also needs to be said that foreign institutional investors are allowed to repatriate the principal, the capital gains, the dividends, the interest and any other receipt from the sale of such financial assets, without any restriction, at the market exchange rate. The income tax rate for dividends on such portfolio investment for foreign institutional investors is 20 per cent, which is much lower than the corporate income tax rate for domestic or foreign firms. But foreign institutional investors are subject to a higher short-term capital gains tax at 30 per cent compared with 20 per cent for domestic investors, while the long-term capital gains tax is the same at 10 per cent. Sales of such financial assets for the purpose of repatriation are absolutely unrestricted, provided the sales are through stock exchanges. However, disinvestment through any other route, or in any other form, requires approval from the Reserve Bank of India.

Global Depositary Receipt:

Global Depositary Receipt A negotiable certificate held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country. American Depositary Receipts make it easier for individuals to invest in foreign companies, due to the widespread availability of price information, lower transaction costs, and timely dividend distributions. Also called European Depositary Receipt.

The option of portfolio investment was also made available to domestic corporate entities from September 1992. Indian firms were allowed access to international capital markets through global depository receipts or Euro convertible bonds which converted debt into equity after stipulated period. This access, however, was not automatic. Individual applications, drawn up inconformity with the general guidelines of the government, were subject to approval. This process remains unchanged.

Offshore Funds:

An offshore fund is a collective investment scheme domiciled in an Offshore Financial Centre, for example British Virgin Islands, Luxembourg, Cayman Islands or Dublin.

Similar facilities for portfolio investment were subsequently extended to Offshore funds, non-resident Indians (as individuals) and overseas corporate bodies, only for investment in shares or debentures through stock exchanges, on the same terms as foreign institutional investors, but subject to a ceiling of 5 per cent for individual non-resident Indians or overseas corporate bodies in a single Indian firm.

Among the various components of portfolio investment, FII comprises the bulk of portfolio inflows. The main objective of foreign institutional investors is to minimize risk and maximize returns by diversifying their portfolios internationally. Major determinants of investment decisions of FII are country and region specific.

Portfolio flows often referred to as ‘hot- money’ are notoriously volatile capital flows. They have also responsible for spreading financial crisis causing contagion in international market. Evan though, the FIIs have been plying a key role in the financial markets since their entry into this country. The explosive portfolio flow by FII brings with them great advantages as they are engine of growth, lowering cost of capital in many emerging market. This opening up of capital markets in emerging market countries has been perceived as beneficial by some while others are concerned about possible adverse consequences.

Among the most active FIIs are Morgan Stanely Asset Management, jardine Fleming, Capital International, J. Henery schorder, templeton, Warburg Pinkers, Internatioanl Alliance and Quantum fund.

Foreign Institutional Investors in India

India opened her doors to foreign institutional investors in September, 1992. This event represents a landmark event since it resulted in effectively globalizing its financial services industry. Initially, pension funds, mutual finds, investment trusts, Asset Management Companies, nominee companies and incorporated/institutional portfolio managers were permitted to invest directly in the Indian stock markets. Beginning 1996-97, the group was expanded to include registered university funds, endowment, foundations, charitable trusts and charitable. Since then, FII flows which form a part of foreign portfolio investments have been steadily growing in importance in India. Other than in the year 1998, the net flows have been positive. The nuclear tests and East Asian crisis did slow down the flows but as stated by Gordan and Gupta (2003), their effects were short lived. That the percentage of total net turnover of BSE, the share of average of FII sales and purchases increased from 2.6 percent in 1998 to 5.5 percent in 2002. The cumulative net FII investment in India as on August 2003 is approximately $17400 million. As of August 2003 net FII investment was 9 percent of the BSE market capitalization which is small compared to the size of the market. However, in the words of Banaji (2002), it is not the market capitalization that matters but what is important is the level of the free float, that is, the shares that are actually publicly available for trading. With floating stock in the Indian market being less than 25 percent, about 35 percent of the free float available has been bagged by FIIs – despite the fact that they invest in just a few highly liquid stocks.

Though India receives hardly 1 percent of the FII investments in emerging markets, the portfolio flows to India have been less volatile when compared with that of many other emerging markets (Gordan and Gupta, 2003). FIIs by adopting a bottom-up approach seem to invest in top-quality, high growth, large cap stocks (Gordan and Gupta, 2003). Sytse et al. (2003) provide empirical evidence that foreign institutional investors in India, invest in large, liquid companies which enable them to exit their positions quickly at relatively lower cost and also that the foreign institutional owners have a larger impact than foreign corporate owners when performance is measured using stock market valuation criterion.

India is one of the fastest growing economies in South Asia, promising a growth of over 9 percent, second only to China, it would not be a surprise to see increased FII flows to India in the future. FIIs are now looking at the economy as a whole, with the macro-economic factors also playing their role in attracting foreign investors. Factors like a strong currency, key reforms in the banking, power and telecommunications sector, increased consumer spending and stable policies are expected to play a major role in attracting FIIs to India. The Securities Exchange Board of India (SEBI) along with the Institute of Chartered Accountants of India (ICAI) jointly monitor the markets and announces the regulatory measures thus making the Indian companies more transparent and more disciplined.

According to the April 2005 report on corporate governance by CLSA Emerging Markets, India ranks fourth with a score of 55.6 percent. Banaji (2000) emphasizes that the capital market reforms like improved market transparency, automation, dematerialization and regulations on reporting and disclosure standards were initiated because of the presence of the FIIs. But FII flows can be considered both as the cause and the effect of capital market reforms. The market reforms were initiated because of the presence of FIIs and this in turn has lead to increased flows.

The Government of India gave preferential treatment to FIIs till 1999-2000 by subjecting their long term capital gains to lower tax rate of 10 percent while the domestic investors had to pay higher long-term capital gains tax. The Indo-Mauritius Double Taxation Avoidance Convention 2000 (DTAC), exempts Mauritius-based entities from paying capital gains tax in India – including tax on income arising from the sale of shares. This gives an incentive for foreign investors to invest in Indian markets taking the Mauritius route. Consequently, we now see investments coming from Mauritius while there were none before 2000.

The country wise distribution of the FIIs registered in India, with majority of them coming from USA and UK. Chakrabarti (2002) and Rao et al. (1999) point out the fact that due to existing inter-linkages, the source of the FII investment might not be the country from where the institution operates. Nevertheless, the figure gives us an idea of the country wise distribution of the FIIs in India. So as to encourage long term investments in the Indian market, Budget 2003 proposed that investors who buy stocks of listed companies from March 1, 2003 be exempt from paying tax on the gains they make on their investments, provided they hold them for more than one year. With so much to benefit from, the FII investment in India is likely to increase in the future.

Regulation on FII

Investment by FII was jointly regulated by Securities and Exchange Board of India (SEBI) through the SEBI (Foreign Institutional Investors) Regulations, 1995 and by the Reserve Bank of India through Regulation 5(2) of the Foreign Exchange Management Act (FEMA), 1999. The promulgation of legislation pertaining to foreign investment by SEBI in 1995 market a watershed for FII flows to India; this led to a significant increase in the level of FII equity inflows in the pre-Asian crisis period. The SEBI FII Regulations and RBI policies are amended and modified from time to time in response to the gradual maturing of the Indian financial market and changes taking place in the global economic scenario.

In order to trade in India equity market, foreign corporation need to register with SEBI as Foreign Institutional Investors. Without registration they can invest, but cases require the approval from RBI. They are generally concentrated in secondary market. FII are allowed to invest in

a) Securities in primary and secondary market including shares, debentures and warrant of companies, unlisted, listed or to be the listed in India.

b) Units of mutual funds

c) Dated government securities

d) Derivative traded in a recognized stock market and

e) Commercial papers

FII can invest their own funds as well as invest on behalf of their over seas clients registered as such with SEBI. These client accounts that the FII manages are known as ‘sub accounts’. FII sub accounts include those foreign corporate, foreign individual, institution funds or portfolio established or incorporated out side India.

FII may issue deal in or hold off share derivative instrument such as participatory notes (PN). The entities that can subscribe to the PN are : a) Any entity incorporated in a jurisdiction that requires filing of constitutional or other documents with a registrar of companies or comparable regulatory agency or body under the applicable companies legislation in that jurisdiction; b) Any entity that is regulated, authorized or supervised by a central bank, such as the Bank of England, or any other similar body provided that the entity must not only be authorized but also be regulated by the aforesaid regulatory bodies; c) Any entity that is regulated, authorized or supervised by a securities or futures commission, such as the Financial Services Authority or other securities or futures authority or commission in any country , state or territory ; d) Any entity that is a member of securities or futures exchanges such as the New York Stock Exchange or other self-regulatory securities or futures authority or commission within any country, state or territory provided that the aforesaid mentioned organizations which are in the nature of self- regulatory organizations are ultimately accountable to the respective securities financial market regulators.

Investment limit

As per the September 1992 policy permitted foreign institutional investment registered FII could individually invest in a maximum of 5% of a company’s issued capital and all FIIs together up to a maximum of 24%. From November 1996 are allowed to make 10 percentage investment in debt securities subject to the specific approval from SEBI as a separate category of FIIs or sub accounts as 100% debt fund investment such investment were of occurs subjected to the fund specific ceiling prescribed by SEBI and had to be within overall ceiling US 1.5 $. The investment was however, restricted to the debt instrument of companies listed or to be listed on the stock exchanges. In 1997, the aggregate limit on investment by FIIs was allowed to be raised from 24% to 30% by then board of directors of individual companies by passing a resolution in their meeting and by special resolution to that effect in the company’s Board meeting. In June 1998 the 5% individual limit was raised to 10%.In March 2000, the ceiling on aggregate FII portfolio investment increased to 49%.This was subsequently raised to 49%, on March 8 2001, Finance minister announced February 28 2002 that foreign institutional investors can invest in accompany under the portfolio investment rout beyond 24% of the paid up capital of the company with the approval of the general body of the share holders by a special resolution.

Benefits and costs of FII investments

The terms of reference asking the Expert Group to consider how FII inflows can be

encouraged and examine the adequacy of the existing regulatory framework to adequately address the concern for reducing vulnerability to the flow of speculative capital do not include an examination of the desirability of encouraging FII inflows. Yet, for motivating the consideration of the policy options, it is useful to briefly summarize the benefits and costs for India of having FII investment. Given the Group’s mandate of encouraging FII flows, the available arguments that mitigate the costs have also been included under the relevant points.

Benefits

Reduced cost of equity capital

FII inflows augment the sources of funds in the Indian capital markets. In a commonsense way, the impact of FIIs upon the cost of equity capital may be visualized by asking what stock prices would be if there were no FIIs operating in India. FII investment reduces the required rate of return for equity, enhances stock prices, and fosters investment by Indian firms in the country.

Imparting stability to India’s Balance of Payments

For promoting growth in a developing country such as India, there is need to augment domestic investment, over and beyond domestic saving, through capital flows. The excess of domestic investment over domestic savings result in a current account deficit and this deficit is financed by capital flows in the balance of payments. Prior to 1991, debt flows and official development assistance dominated these capital flows. This mechanism of funding the current account deficit is widely believed to have played a role in the emergence of balance of payments difficulties in 1981 and 1991. Portfolio flows in the equity markets, and FDI, as opposed to debt-creating flows, are important as safer and more sustainable mechanisms for funding the current account deficit.

Knowledge flows

The activities of international institutional investors help strengthen Indian finance. FIIs advocate modern ideas in market design, promote innovation, development of sophisticated products such as financial derivatives, enhance competition in financial intermediation, and lead to spillovers of human capital by exposing Indian participants to modern financial techniques, and international best practices and systems.

Strengthening corporate governance

Domestic institutional and individual investors, used as they are to the ongoing practices of Indian corporates, often accept such practices, even when these do not measure up to the international benchmarks of best practices. FIIs, with their vast experience with modern corporate governance practices, are less tolerant of malpractice by corporate managers and owners (dominant shareholder). FII participation in domestic capital markets often lead to vigorous advocacy of sound corporate governance practices, improved efficiency and better shareholder value.

Improvements to market efficiency

A significant presence of FIIs in India can improve market efficiency through two channels. First, when adverse macroeconomic news, such as a bad monsoon, unsettles many domestic investors, it may be easier for a globally diversified portfolio manager to be more dispassionate about India’s prospects, and engage in stabilsing trades. Second, at the level of individual stocks and industries, FIIs may act as a channel through which knowledge and ideas about valuation of a firm or an industry can more rapidly propagate into India. For example, foreign investors were rapidly able to assess the potential of firms like Infosys, which are primarily export-oriented, applying valuation principles that prevailed outside India for software services companies.

Costs

Herding and positive feedback trading

There are concerns that foreign investors are chronically ill-informed about India, and this lack of sound information may generate herding (a large number of FIIs buying or selling together) and positive feedback trading (buying after positive returns, selling after negative returns). These kinds of behavior can exacerbate volatility, and push prices away from fair values. FIIs’ behavior in India, however, so far does not exhibit these patterns. Generally, contrary to ‘herding’, FIIs are seen to be involved in very large buying and selling at the same time. Gordon and Gupta (2003) find evidence against positive-feedback trading with FIIs buying after negative returns and vice versa.

BoP vulnerability

There are concerns that in an extreme event, there can be a massive flight of foreign capital out of India, triggering difficulties in the balance of payments front. India’s experience with FIIs so far, however, suggests that across episodes like the Pokhran blasts, or the 2001stock market scandal, no capital flight has taken place. A billion or more of US dollars of portfolio capital has never left India within the period of one month. When juxtaposed with India’s enormous current account and capital account flows, this suggests that there is little evidence of vulnerability so far.

Possibility of taking over companies

While FIIs are normally seen as pure portfolio investors, without interest in control, portfolio investors can occasionally behave like FDI investors, and seek control of companies that they have a substantial shareholding in. Such outcomes, however, may not be inconsistent with India’s quest for greater FDI. Furthermore, SEBI’s takeover code is in place, and has functioned fairly well, ensuring that all investors benefit equally in the event of a takeover.

Complexities of monetary management

A policymaker trying to design the ideal financial system has three objectives. The policy maker wants continuing national sovereignty in the pursuit of interest rate, inflation and exchange rate objectives; financial markets that are regulated, supervised and cushioned; and the benefits of global capital markets. Unfortunately, these three goals are incompatible. They form the “impossible trinity.” India’s openness to portfolio flows and FDI has effectively made the country’s capital account convertible for foreign institutions and investors. The problems of monetary management in general, and maintaining a tight exchange rate regime, reasonable interest rates and moderate inflation at the same time in particular, have come to the fore in recent times. The problem showed up in terms of very large foreign exchange reserve inflows requiring considerable sterilization operations by the RBI to maintain stable macroeconomic conditions. The Government had to introduce a Market Stabilization Scheme (MSS) from April1, 2004.

With the foreign exchange invested in highly liquid and safe foreign assets with low rates of return, and payment of a higher rate of interest on the treasury bills issued under MSS,

sterilization involves a cost. With a rapid rise in foreign exchange reserves and the need for having an MSS-based sterilization involving costs, questions have been raised about the desirability of encouraging more foreign exchange inflows in general and FII inflows in particular. While there is indeed the issue of timing the policy of encouragement appropriately to avoid the pitfalls of throwing the baby with the bath water, there can not be a turnaround from the avowed policy of gradual liberalization, including the cap ital account. All modern market economies have evolved policies to reconcile prudent monetary management with the benefits of a liberal capital account. There is no scope for any diffidence in India also moving in the same direction.

CONCLUSION

The liberalization policies had the desired expansionary effect and had either increased the mean level of FII inflows and/or the sensitivity of these flows to a change in BSE returns and /or the inertia of these flows. On the other hand, the restrictive measures aimed at achieving greater control over FII flows also did not show any significant negative impact on the net inflows, it had found that these policies mostly render FII investment sensitive to the domestic market returns and raise the inertia of the FII flows.

Foreign institutional investors had emerged as the most dominant investor group in the domestic stock market in India. Particularly, in the companies that constitute the Bombay stock market sensitivity index, their level of control was very high. Data on shareholding pattern showed that the FIIs were currently the most dominant non-promoter shareholder in most of the sensex companies and they also controlled more tradable shares of sensex companies than any other investor groups .The sensex, market capitalization of NSE, Turnover of BSE and NIFTY without market capitalizations were influenced by Foreign Institutional Investors. FIIs investment was not across the shares listed in the stock exchange but instead it was very concentrated on the top few company’s shares. Though there was a role by FII on Indian stock market. It was to be taken very cautiously because their influences were on the very few shares in the stock market, which influenced the indicator included in the study but which might not help the Indian economy to grow

The influence of FIIs on the movement of sensex became apparent after general election in India, during this period sensex experienced its worst single-day decline in its history and in the three month period between April to June 2004, it declined by about 17 percent. Moreover, this study also showed that even sharp changes in sensex did not necessarily indicted a significant alteration of actual shareholding pattern of different investor groups even in sensex companies. The activities of foreign institutional investors in emerging economies following the opening-up of the capital account were not simply positive for these countries but could also exert adverse effects. The reasons were derived from asymmetric distributions of information between local and foreign investors and between fund holders and mangers. Foreign institutional investors could be assumed to have relatively little information on specific developments in emerging markets so that ‘diluted information’ and ‘illusive competition’ could result. Their influence on these markets was likely to worsen the relative position of local investors which leads to ‘unbalanced diversification’. Moreover, due to their incentives they were likely to amplify occurring imbalances or even trigger financial shocks leading to what they call ‘obscure risks’ and ‘booming contagion’. The was long run relationship between net FII investment and sensex, FII investment did not respond the short-run changes or technical-position of the market and they were more driven by fundamentals, and FII investments did granger cause India stock market. The FIIs investments are highly concentrate in terms of their market value in very small number of companies. There seemed to be a clear distinction in the FIIs shareholding in nifty and non-nifty companies. There was a wide gap between the actual investments by FIIs and the investments allowed as per the cap.The gap in their investments existed both in nifty and non-nifty companies

REFERENCES

1 “Parthapratim pal” in 2006, he conducted study on “Foreign Portfolio Investment, Stock market and Economic Development: A case study of India”,

2 “Selen Serisoy Guerin” in 2006, conducted study on “The Role of Geography in Financial and Economic Integration: A comparative Analysis of foreign direct investment, Trade and Portfolio Investment Flows”

3 Keneeth A. Froot and Tarun Ramadorai in 2005, they conducted study on “The information content of international portfolio flows”,

4 A.Julia Priya, D. Lazar and Joseph Jeyapual in 2005, they conducted study on “Role of Foreign Institutional Investors on stock market development in India”,

5 Keneeth A. Froot and Tarun Ramadorai in 2005, they conducted study on “Currency Returns, Intrinsic value, and Institutional-Investor flows”,

6 Megumi Suto and Masashi Toshino in 2005, they conducted a study entitled as “Behavioral Biases of Japanese Institutional Investors: fund management and corporate governance”

7 “Suchismita Bose and Dipankor coondoo” in 2004, they conducted study on “The Impact of FII Regulation in India”,

8 Lakshmi sharma in 2004, he studied, “A Gap Analysis of FIIs Investment-An estimation of FIIs investment Avenues in Indian Equity Market.

9 Parthapratim pal in 2004 conducted study entitled as “Recent volatility in stock markets in India and foreign institutional investors.

10 “Michael Frenkel and Lukas Menkhoff” in 2004, they conducted study on “Are Foreign Institutional Investor Good for Emerging Markets?”,

11 “Brian Bushee” in 2004, he conducted study on “Identifying and attracting the “right” investors: evidence on the behavior of Institutional investors”,

12 “Christophe faugere and Hany A. Shaby in 2003, they analyzed study on “Volatility and Institutional Investor holdings in a declining market: A study of NASDAQ during the year 2000”.

13 Gayathri Devi .R in 2003, she conducted study on “Causal Relationship between FIIs and Stock Market: A critical study”

14 “sandhya Ananthanaryanan, Chandrasekhar krishnamurthi and Nilajan Sen in 2003 conducted study as “Foreign institutional Investors and Security Returns: Evidence from Indian Stock Exchanges”,

15 Stuart L. Gillan and Laura T. Starks in 2003, they conducted study as “corporate Governance, corporate ownership, and the Role of Institutional Investors: A Global perspective”,

16 “Vihang Errunza” in 2001, he conducted study entitled as “foreign portfolio equity investments, financial liberalization and economic development

17 J.S. Pasricha and Umesh.C.Singh in 2001, tried to analyze the impact of FIIs investment on Indian capital market.

18 S.S.S. Kumar in 2001, attempted in his study to find the effect of FIIs on the Indian stock market.

19 “Rajesh chakrabarti” in 2000 conducted study on “FII Flows to India: Nature and Causes”

20 C.H. Rajeswar in 2000, he conducted study entitled “Foreign Institutional Investors – A new force of support and discipline”

21 As per K. Seethapathi and V. Subbulakshmi study entitled “Foreign investment: Need for focus”,

22 Ila Patnik and Deepa Vasudevan in 1998, their study entitled “foreign portfolio investment to India

23 “Rene M. Stulz” in 1999, he analyzed study on “international portfolio flows and security markets”.

24 Yung Chul Park and Chi-Young Song, they conducted study on “Institutional Investors, Trade linkage, Macroeconomic similarities and contagious Thai crisis

Even if you are a business veteran or has started your business, a business bank account is necessary. It makes things a lot easier for you especially when you balance your cashbook. If you do not open a business bank account, you will have trouble managing your business finances.

You may decide to try the bank where you have your personal account. Since you already have a track record with them, they will be more supportive. However, it is still advisable that you get the best deal for your business rather than settling on one bank. Most banks offer different services and products and you should look for something with good flexible benefits for your growing business.

Shop around and compare banks on the high street and always ask the following:

· Do they have small business team that gives advice for start ups?

· What types of business bank account do they offer?

· Do they charge extra for the services?

· How often do they charge (per transaction or one off)?

· What are the possible hidden charges?

Choosing the Business Bank Account

This depends on your needs and how you run your business. A fixed fee account will be better if you have large numbers of transactions, instead of paying fees per transaction. If you need standing orders and free direct debits, the bank you chose will help you decide what type of business bank account you need.

If you want, you can even choose to open several business bank accounts with different banks especially if one single bank can not provide all your needs. Look for banks that can offer better deals if you commit all of your business bank accounts to them.

You will need the following accounts:

· Current Account – Used for everyday on going costs. Look for a bank which offers this kind of business bank account with acceptable interest rates.

· Loan Account – a business bank account that is used to monitor your loan accounts. Review the banks’ different options for loan accounts because sometimes it is better to get a personal loan instead.

· Foreign currency account – You will need this business bank account if you have deals overseas. This saves you from paying multiple large conversion charges.

You should regularly check your accounts. Consider online banking. Opening your business bank account online will be better as all banks have this free of charge, sometimes even offering lower fees.

Choosing a bank for your business is very important; realize that what you need is an institution that gives you flexible or suitable terms for your business. This means that you need to choose a business bank account that is customized for your individual business. Remember that you have many choices for banks. If it does not work out as planned, just change to another one, but do not forget to do your research or you might end up worse than before.

When you have decided what business bank account and which bank you are going to work with, set up a meeting to discuss the requirements you need.

Whichever way you plan to invest, this section will give you some tips and techniques to get you started

Understand why you are investing.

One of the keys to successful investing is identifying your investment goals, and the time frame over which you will invest. What do you want to do with your money?

Do you want to save for a goal? Do you want to invest a certain amount? How long do you want to put that money away for?

Your goals and time frame

When investing money, many people have a specific goal in mind. If this is the case for you, you need to decide what time frame is attached to that goal — short term, medium term or long term?

Short term (1–3 years) deposit on a home overseas holiday new car starting a family Medium term (3–7 years) boat house renovations Long term (7+ years) children’s education deposit on a holiday house retirement

Rather than having a particular investment goal, some people may just want to invest a sum of money, for example, an inheritance. If you are in this situation, you need to decide what you want from that money. Do you want to use the money in the next year or two? (in which case you are a short-term investor).

Or do you want a regular income? Or do you want it to achieve capital growth over the long term?

A short-term investor would be more likely to choose a more conservative investment like cash, to ensure that their capital is available in the next one to three years when they need to access it. A long-term investor would be more willing to invest in growth assets such as shares, as they do not need to access their capital for at least five years, so are usually less concerned about short-term ups and downs. They recognise that the potential returns are higher in growth investments, and if they are held over the long term the risk associated with short-term volatility is reduced.

Don’t forget that superannuation is one of the most tax-effective ways to invest for the long term. If you would like more information on superannuation, contact your financial adviser.

In considering which type of investment is most suitable for your goals, a professional financial adviser can help you with this decision after analysing your investment objectives, particular needs and financial situation.

2. Become an investor instead of a saver.

Many people invest but only some become wealthy. Why? The mistake many people make when investing is that they treat their investment as saving. So what is the difference between saving and investing? Saving is what you do to build up funds for something, like a holiday, and when you have the amount saved, you withdraw your capital from your investment and spend it.

Investing is different. People who want to build wealth invest their money for the long term in growth assets, such as shares and property. Their strategy is to spend the income that the investment produces, but leave the capital invested. They don’t withdraw the capital, so it stays there to grow, which in turn allows more income to be produced.

If you do this it will take you a while longer initially to get to your investment goal, but in the long run you will find that the extra wait has been worth it. As the years go by, you may have an increasing additional income stream from your investments and your standard of living can rise accordingly.

So what’s the secret to becoming wealthier? It’s easy! Start investing, and stay invested.

Other Tips to Remember…

Start early and take advantage of compound interest.

There is always a ‘good’ reason for not investing, but there is actually an even better reason to start investing right away. In fact, starting sooner rather than later is one of the best investment decisions you can make. The reason? So you can take advantage of compand interest. The problem is that compound interest works against those who hesitate. Most of us studied compound interest at school, so we know how it works. But it’s not until you start looking at practical examples that you realise how powerful it can be.

Use market movement to your advantage.

Dollar cost averaging – One way to ride out the market’s ups and downs is a technique called dollar cost averaging, typically used in managed funds. With dollar cost averaging, you don’t have to focus on where share prices or interest rates are headed. You simply invest a set amount of money on a regular basis. Dollar cost averaging is an investment technique that can help turn the odds in your favour. The idea is that you buy less units when the market is up, and more units when it is down — automatically.

Don’t try to time the market.

One of the excuses many use for not investing is that it is not the right time to invest. These people are likely to be under the misconception that they have the magical powers to be able to predict the future. They are under the illusion that the path to riches is a matter of getting on the right horse at the right time.

However, as investors begin to learn the vagaries of markets, they begin to realise the insurmountable difficulty in picking market movements. Trying to pick the magnitude and direction of market movements has cost even the most experienced investor dearly. Don’t chase returns.

Investing in the fund that had the best performance last year may be a big mistake! Most fund managers will offer you a choice of many different types of managed funds, from shares and property to fixed interest and cash, to mixtures of all of them. There are also usually a range of different share funds investing in different parts of the world. Given such a wide choice of investments, and the ability to switch your investments between them for little or no fees, some people make the mistake of chasing returns.

Chasing returns means that you are moving your investments across to the fund that had the best performance last year. Why can this be a mistake?

America’s credit crisis continues to sour. On February 5, 2008, the stock market had its worst decline in nearly a year. Driven down by shrinkage in service industries, the S&P 500 stock market index dropped by 3.2%. Economists predict that in the next year, American banks will suffer great losses, with direct consequences to you, the customer. Be on the watch for how the nationwide credit crisis affects you and your assets.

If you are applying for a loan, educate yourself first about the stability of the bank, prior to committing yourself. In these dangerous economic times, you need to be sure your money is safe and that you are getting a competitive interest rate. Ask your bank frank questions about how they plan to survive in the long term. Also ask how they determine risk decisioning and what they use for loan origination solutions.

Educate yourself about the stock market and the current economic pickle in which America finds herself. Banks are stingier than ever about giving out loans, and it is in your best interest to know why, instead of assuming your loan request was denied because of that coffee stain on your tie.

On February 4 th the Federal Reserve published its most recent quarterly survey of bank-lending officers, proving that credit troubles are increasing. The Federal Reserve stated that many banks have tightened the belt on lenders, with harsher lending standards and higher rates on loans.

Do economists foresee that capital markets will head to sunnier times in 2008? Not so much. With the recession over our heads, the percentage of borrowers expected to default on their loans is expected to rise. Banks are largely suffering due to big bucks loans that aren’t being paid back.

Investors are feeling the pain. On January 30 th the S&P threatened to downgrade over 8,000 bonds and CDOs, because financial institution’s losses are posed to double in the next year to an immense $265 billion.

Although it is unlikely your bank will claim bankruptsy, other consequences are mounting. 70% of loan officers expect the quality of their credit card and other consumer-loan portfolios to become more troubled in the next year, according to the Federal Reserve’s survey. Wachovia, a substantial North Carolina based bank, fell to $51 million from $2.3 billion, mostly because of losses on residential property and car loans.

With the real estate market flailing, regional and local banks alike are more hesitant than ever to give out “construction loans.” If you were hoping to build your home and obtain a loan for it, be aware of rising interest loans and setbacks. Listen to what the experts are saying: At the end of January 2008, John Dugan, the Controller of Currency, stated that one-third of community banks currently have commercial-property loans that are over three times their capitol. Ouch. He also predicted an increase in bank failures and loan-loss reserves.

Financial regulators and bankers should combine forces to find a solution for these doomsday predictions. In the meantime, keep these facts in mind when you are applying for your next bank loan, and know that risk decisioning is tougher than ever.

It is a big day in one’s life when one gets one’s own bank account. I remember feeling elated, really elated when I got that account and its accompanying check book. Along with a bank account comes the feeling of being rich. At least, after one has acquired a bank account of one’s own, one can become more independent. This is your own money.
For many, it does not even matter whether they have access to it or not. However, before one opens a bank account, one must take certain precautions and steps to ensure he is approaching the right bank. The services and benefits offered must suit their needs; else they will end up locking up their finances and will be unable to enjoy the benefits of having one’s own money. Bank accounts are not commodities. Make sure to choose the right bank.
First figure out what it is you are looking for. Then find a bank that meets that need. You can go always along with the choice of a friend or who already has a functioning bank account. You need to take some time, and understand that opening a bank account is a big step. It will involve a lot of paper work. Since it is a bank account, it is a bog deal. So many steps will have to be taken first.
Here are some pointers on how you could go about opening a bank account:
1. Which bank and what type of account? – When choosing a bank you could go along with the general market standards. Alternatively, you could take the advice of people who you value. You should be looking at identifying a bank that you would like to be associated with. Having done this, you would need to decide what kind of an account you would like to open. The basic choices are between a general savings account and a current account. Choosing should be easy if you can forecast the nature and quantum of transactions you will need to make.
2. Visit the bank – Make a visit to the bank, and approach the front desk to learn about whom you should approach to open an account. Once you do this, meet the person in charge to learn more about the different kinds of accounts that the bank offers. Make sure you know what documents will be required.
3. The brass tacks – Once you have gathered all the necessary documents, such as photographs, address proof (your telephone bill or social security card) and identity proof (driver’s license or passport) , you can walk into the branch of the bank closest to your residence or into some other bank that suits your convenience.
You will then have to fill out the various forms that are mentioned by the executive, giving accurate information pertaining to your age, address, employment or educational details, and your social security number so that you comply with the regulations. Before the account is operational you need to await that one last step where the documents are sent to your snail mail address. Once that happens, you are all set.

At present, there are two major banks in Ireland. Allied Irish Bank and Bank of Ireland are known as the largest, with over 300 branches each. Ulster Bank and National Irish Bank follow, with about five smaller banks rounding out the group. Just like the U.S., all Irish banks offer Internet services and 24-hour phone services. You might see a few familiar banks in the area, such as Citibank and Bank of America, but they are not major players and you will likely have to transfer money to Ireland banks once you move.

Before you obtain a bank account in Ireland, you will need to gather references from your U.S. bank. They need to state that you have been a good customer while there. Also, know that in this country, it could take up to six months to get a credit or debit card through your bank, which is why keeping your old one, or perhaps getting a prepaid debit card, is a good idea. Once you do get a card from an Irish bank, you can only use it to withdraw money from ATMs, for which you have to pay a fee. Eventually, you might be issued a laser card, which can be used internationally and as a regular debit card, but you must prove you are a great customer for this, unlike in the United States.

Additionally, before you open a bank account in Ireland, you will need a Personal Public Service Number, or PPS No., which you can apply for once you have a permanent address in the country. You will also need your passport and birth certificate. Please note that you only need a PPS No. in the Republic of Ireland, not Northern Ireland.

Many people advise keeping your U.S. checking account open when you move, especially if you still have property or other bills to pay here. It will be easier to pay your U.S. bills with a U.S. account, rather than having to send money that has to be changed from euros to dollars. Additionally, you won’t have to deal with unfavorable exchange rates, and many items are cheaper to buy in the U.S. than in Ireland. You can avoid certain transaction fees with an American bank account, and since many retailers don’t even accept euros or anything other than U.S. dollars, you can save yourself some hassle by keeping a basic checking account in America.

If you do keep an account back home once you move to Ireland, you can easily wire money to and from your different accounts. However, it often takes a few days. If, for example, you have a bill to pay in Ireland and need money from your other account in the U.S., you could transfer money from one account to the other, but it might take two to three business days to go through. In fact, Irish banks are known for being difficult when it comes to international money transfers. Using a prepaid debit card could solve this issue. You could send one to your new address, and whenever you need to get money from your American account to the Irish account, you can go to the debit card website and send the money to your card.

The money will typically be available either instantly or the next day. You can use the card number and PIN to pay bills online, or you can take out cash at one of the many ATMs located around the country. Visa and MasterCard are both accepted widely in this country. This is a fast, inexpensive way to transfer money from one account to another when you move to Ireland. The charge is a flat fee of about $5, so you can send as much money as you want as one time.

Moving is difficult normally, but moving from one country to another is a major change. You shouldn’t have to wonder how you are going to juggle your financial responsibilities in the United States while setting up your new home in Ireland. Knowing the available methods of transferring money to Ireland before you move is helpful.