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    Question

    Which of the following statement about Indian Depository Receipt is correct?

    A Issue of investment papers by IMF to members country Correct Answer Incorrect Answer
    B Issue of investment papers by Alternate Investment Funds outside India Correct Answer Incorrect Answer
    C Issue of depository receipt outside India against underlying equity shares of company incorporated in India. Correct Answer Incorrect Answer
    D Issue of depository receipt in India against underlying equity shares of company incorporated outside India. Correct Answer Incorrect Answer
    E Issue of investment papers by International stock market to India Correct Answer Incorrect Answer

    Solution

    Indian Depository Receipt(IDR) is afinancial instrumentdenominated inIndian Rupeesin the form of adepository receipt. The IDR is a specific Indian version of the similarglobal depository receipts (GDR) It is created by aDomestic Depository(custodian of securities registered with theSEBI) against the underlying equity of issuing company to enable foreign companies to raise funds from the Indian securities markets. The foreign company IDRs will deposit shares to an Indian depository. The depository would issue receipts to Indian investors against these shares. The benefit of the underlying shares (like bonus, dividends etc.) would accrue to thedepository receiptholders in India.

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