Indian Depository Receipts

Indian Depository Receipt (IDR) is a rupee denominated financial instrument created by a domestic depository (custodian of securities registered with the Securities and Exchange Board of India (SEBI).
It is issued against the underlying equity of the company to enable foreign companies to raise funds from the Indian securities Markets.
As foreign companies are not allowed to list on Indian equity markets, IDR is a way to own shares of those companies. These IDRs could be listed on the Indian stock exchanges.
Through the IDRs, investors could directly invest money into international companies.
Standard Chartered Bank was the first foreign corporation to issue an IDR.

An IDR is issued by a foreign firm that cannot go through the Indian listing process.
An IDR is beneficial for a foreign firm that wishes to share the risk and rewards of the offering with Indian shareholders.
IDRs are simply more easy and more cost-effective than buying stocks on international exchanges.
IDRs are derivative instruments in this sense because their value is derived from the underlying shares.
IDRs are denominated in Rupees. It reflects a stake in a certain number of the Issuing Company’s underlying equity shares. Deposited Shares are the name for these shares.
These IDRs would be freely transferable and placed on Indian stock markets.

Intermediaries involved in Issuing IDR

An Overseas Custodian Bank is a banking organization based in a nation other than India with a presence in India that functions as a custodian for the equity shares of the issuing company against which IDRs are intended to be issued in the issuer’s underlying equity shares.
Domestic Depository, which is a securities custodian registered with SEBI and authorized by the issuing company to issue Indian Depository Receipts; c) Merchant Banker, who is responsible for due diligence and through whom the issuer company files the draught prospectus for the issuance of the IDR with SEBI.