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Centre, RBI look to ease IDR norms

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After liberalising the external commercial borrowing (ECB) regime for companies looking to raise debt abroad, the government and the Reserve Bank of India are having a look at easing the norms on Indian Depository Receipts ( IDR) for foreign companies, Business Standard has learnt. Sources aware of the matter said the likely base for such recommendations would be a report last year on IDRs from a panel chaired by Competition Commission of India ( CCI) member M S Sahoo.
While American and Global Depository Receipts (ADRs/ GDRs) allow Indian companies to access capital markets abroad, an IDR is a security a foreign company can list on Indian exchanges.
The 11- member Sahoo committee made many recommendations on overhauling the IDR market. These included a whole new class of securities called Bharat Depository Receipts ( BhDRs) to replace IDRs.
Also, the widening of underlying securities to include all instruments accessible to an Indian investor, widening of endusage rules for capital and non- capital purposes, clear taxation provisions and an easier regulatory framework, among others.
The report was on the back burner all this while and it was assumed the finance ministry wasn’t considering the suggestions.
However, officials now say it is now being looked at as a starting point for any future announcements on IDR markets.
“We are looking to liberalise the IDR regime, to deepen the capital markets and attract more foreign companies to raise funds from the BSE and National Stock Exchange,” said an official. “ The government and RBI have started work on this issue. The Sahoo recommendations are being looked at.”
Business Standard, New Delhi, 8th Dec. 2015

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