The Reserve Bank of India (RBI) has allowed the foreign companies to raise money from the Indian stock markets through Indian Depository Receipts (IDRs).
It is learnt from the RBI notification that it has decided to operationalise the IDR rules with immediate effect.
Thus, overseas companies can now issue IDRs 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 (Foreign Exchange Management Act) regulations will not apply to persons resident in India for investing in IDRs and also subsequent transfer arising out of transaction on a recognized 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
Source : Myiris.com