RBI by circular dated July 22, 2009 has decided to operationalise the Indian Depository Receipt (IDR) rules, notified by Government of India with immediate effect.
Salient features of the RBI circular are as under:
1. Eligible companies resident outside India may issue IDRs through a Domestic Depository. The permission has been granted subject to compliance with the Companies (Issue of Depository Receipts) Rules, 2004 and subsequent amendments made thereto and the SEBI (DIP) Guidelines, 2000, as amended from time to time.
2. In case of raising of funds through issuance of IDRs by financial/banking companies having presence in India, either through a branch or subsidiary, the approval of the sectoral regulator(s) should be obtained before the issuance of IDRs.
3. The FEMA Regulations shall not be applicable to persons resident in India as defined under section 2(v) of FEMA, 1999, for investing in IDRs and subsequent transfer arising out of transaction on a recognized Stock Exchange in India.
4. Foreign Institutional Investors (FIIs) including SEBI approved sub-accounts of the FIIs, registered with SEBI and Non-Resident Indians (NRIs) may also invest, purchase, hold and transfer IDRs of eligible companies resident outside India and issued in the Indian capital market, subject to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 notified vide notification no. FEMA 20/2000-RB dated May 3, 2000.
5. NRIs are allowed to invest in the IDRs out of funds held in their NRE / FCNR(B) account, maintained with an Authorised Dealer / Authorised bank.
6. Automatic fungibility of IDRs is not permitted.
7. IDRs shall not be redeemable into underlying equity shares before the expiry of one year period from the date of issue of the IDRs.
8. The proceeds of the issue of IDRs shall be immediately repatriated outside India by the eligible companies issuing such IDRs. The IDRs issued shall be denominated in Indian Rupees.
For details please refer to RBI circular available at – http://rbi.org.in/scripts/NotificationUser.aspx?Id=5185&Mode=0
