The Reserve Bank of India (RBI) today allowed the foreign companies to raise money from the Indian stock markets through Indian Depository Receipts (IDR).
"It has been decided to operationalise the IDR Rules with immediate effect," the central bank said in a notification.
Thus, overseas companies can now issue Indian Depository Receipts through a domestic depository and can purchase, possess, transfer and redeem IDRs.
However, financial/banking companies having presence in India, either through a branch or subsidiary, have to get permission of the sectoral regulator like RBI or IRDA before issuing IDRs.
The RBI said that FEMA Regulations will not apply to persons resident in India for investing in IDRs and also subsequent transfer arising out of transaction on a recognised stock exchange.
Foreign institutional investors (FIIs), including Sebi-approved sub-accounts of the FIIs, NRIs, have also been allowed to invest, purchase, hold and transfer IDRs.
IDRs will not be redeemable into underlying equity shares before the expiry of one year period from the date of issue of the IDRs.
