The Finance Ministry-appointed Sahoo-II panel will meet here next Wednesday to consider, among other things, measures to improve the attractiveness of Indian Depository Receipts (IDRs) for issuers.
As an instrument for raising capital from India and improving visibility here, IDRs have not taken off. So far, over the last decade, only one issuer — Standard Chartered Bank — has issued IDRs. The receipts issued by this foreign bank have been listed on a local bourse in India. IDRs are receipts denominated in Indian rupees created by a domestic depository against the underlying equity shares of an issuing company.
This panel has now decided to submit a separate report on IDRs, sources said. The National Stock Exchange, the country’s largest bourse, has initiated discussions with intermediaries to see how the IDR framework can be improved further, Ravi Varanasi, Chief — Business Development, NSE, told
He said the bourse was not looking to approach SEBI for now on this matter, but was keen to get the views of intermediaries.
Multiple factors go into a corporate deciding to issue IDRs, he pointed out.
Two-way fungibility Meanwhile, the Sahoo panel will not be averse to getting written comments of NSE and other bourses on the issue of improving the IDR framework, sources said.
SEBI has allowed continuous two-way fungibility of IDRs to investors after a year of listing. Two-way fungibility refers to the conversion of shares into IDRs and vice-versa by the holder of an IDR.
In the first phase, the Sahoo panel — set up in September 2013 — had submitted several recommendations to open wider the depository receipts window.
It had suggested allowing Indian companies to issue depository receipts in overseas markets against any underlying security.
Currently, domestic companies can issue such receipts only against ordinary equity shares.