Reserve Bank of India
A. P. (DIR Series) Circular No. 19
August 28, 2012
To,
All Category – I Authorised Dealer banks
Madam/Sir,
Issue of Indian Depository Receipts (IDRs) - Limited two way fungibilty
Attention of Authorised Dealers Category – I (AD Category - I) banks is invited
to
A.P. (DIR Series) Circular No.5 dated July 22, 2009, in terms of which, the
guidelines regarding issue of IDRs by eligible companies resident outside India
have been laid out.
- It has now been decided to allow a limited two way fungibility for IDRs
(similar to the limited two way fungibility facility available for ADRs/GDRs)
subject to the following terms and conditions:
- The conversion of IDRs into underlying equity shares would be governed by the
conditions mentioned in paras 6 and 7 of A.P. (DIR Series) Circular No. 5 dated
July 22, 2009.
- Fresh IDRs would continue to be issued in terms of the provisions of A.P.
(DIR Series) Circular No. 5 dated July 22, 2009.
- The re-issuance of IDRs would be allowed only to the extent of IDRs that
have been redeemed /converted into underlying shares and sold.
- There would be an overall cap of USD 5 billion for raising of capital by
issuance of IDRs by eligible foreign companies in Indian markets. This cap would
be akin to the caps imposed for FII investment in debt securities andwould be
monitored by SEBI.
Accordingly, Para 5 of A.P. (DIR Series) Circular No. 5 dated July 22, 2009
stands amended as above.
- The issuance, redemption and fungibilityof IDRs would also be subject to the
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as
amended from time to time as well as other relevant guidelines issued in this
regard by the Government, the SEBI and the RBI from time to time.
- AD Category - I banks may bring the contents of the circular to the notice of
their customers/constituents concerned.
- Necessary amendments to Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident outside India) Regulations, 2000 (Notification No.
FEMA 20/2000-RB dated May 3, 2000) are being notified separately.
- The directions contained in this circular have been issued under Sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager
RBI/2012-13/178