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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 a financial instrument denominated in Indian Rupees in the form of a depository receipt. The IDR is a specific Indian version of the similar global depository receipts (GDR) It is created by a Domestic Depository (custodian of securities registered with the SEBI) 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 the depository receipt holders in India.

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