28 Nov

Depository Receipts for SFMG (ADR, GDR, IDR) | CA Final SFM

Raising Funds by an Indian Company through ADR

  1. Deposit of the securities of an Indian company with a custodian bank (agent of the depositary) in India.
  2. The custodian bank makes acknowledgement of deposits to the depository in the US.
  3. The depository in the US then issues the ADRs to the investors in the US.
  4. The US$ receipts in the hands of the depository are passed on to the Indian Company issuing shares.

American Depository Receipt (ADR)

  • A certificate (receipt) that represents shares of a foreign company, owned and issued by a U.S. Bank (Depositary).
  • Issued in accordance with the provisions stipulated by the Securities and Exchange Commission of USA.
  • The foreign shares are held in custody overseas, but the certificates traded on one of the three major U.S. equity markets (the NYSE, AMEX or NASDAQ).
  • ADRs are denominated in US$ and funds in the hands of the share issuing company are also in US$.


  • ADR and GDR are commonly used by the Indian companies to raise funds from the foreign capital market.
  • The principal difference between ADR and GDR is in the market in which they are issued and the exchange in which they are listed.
  • WhileADRis traded on US stock exchanges, GDR is traded on European stock exchanges.
  • WhileADR is issued by a US bank, GDR is issued by the international depository bank, representing foreign company’s stock trading globally.
  • ThroughADR issue, funds can be raised in US stock market, Through GDRissue, funds can be raised in any country’s stock market except USA

Indian Depository Receipt (IDR)

  • An IDR is a way for a foreign company to raise money in India. In an IDR, foreign companies would issue shares, to an Indian Depository, which would in turn issue depository receipts (IDR) to investors in India.
  • The actual shares underlying the IDRs would be held by an Overseas Custodian, which shall authorize the Indian Depository to issue the IDRs.
  • IDR are issued by a domestic depository in India and denominated in Indian Rupees.

Latest Posts

Tips by CA Harish Wadhwani (Scored 93 marks in SFM)

Congratulations…!! CA Harish Wadhwani for scoring 93 marks in SFM (CA Final)

Securitization CA Final SFM (Strategic Financial Management)

Securitization CA Final SFM Securitisation a chapter in Strategic Financial Management (SFM). This is an important chapter from the CA Exam point of view as well. The concept has been explained with a comprehensive example, to make sure the concepts are very clear. It mainly talks about Debt Securitisation, Mortgage-Backed Securities, Securitisation Process, Credit Rating Continue reading

Things you should do before your CA Final Exams

Things you should do before your CA Final Exams Clearing CA Final Exam is clearly not a simple cake walk. You need to be extremely committed to attending your CA final coaching classes. As the subjects are numerous, you need to study your lessons as and when they’re taught your respective CA final Coaching class. Continue reading

CA Final SFM, quick preparation tips

CA final SFM has a few topics which carry a fine weight-age in each trial which are Foreign Exchange Risk Management, Capital Budgeting, Derivatives, and Portfolio Management. But in its place of starting with a topic keeping huge concepts start with a bit lighter note and extremely interesting niche i.e. Bold Valuation. Thereafter full acquisition Continue reading

Two Way Quotes | Forex | CA Final SFM

 A Two way Quote indicates a set of two different rates of exchange known as Bid Rate and Ask Rate. In a Two Way Quotes, the rate at which bank will buy the currency and the customer will sell the currency is known as Bid Rate. The rate at which bank will sell the Continue reading

What is an Exchange Rate | Direct Quote & Indirect Quote

 Exchange Rate A rate at which one currency can be exchanged with the other. It is a rate at which one currency expressed in terms of the other. It is a rate at which a currency can be bought or sold. Direct Quote & Indirect Quote

Corporate Valuation Basics | CA Final SFM

 Need for Corporate Valuation Along with the enterprise growth, number of stakeholders also grows. Presentation of annual financial statements becomes. Curiosity of the stakeholders to understand the ‘true worth’ of their enterprise becomes translated to the concept of ‘valuation’. The market analysts, financial intermediaries, and the academicians, also attempt to apply their valuation approaches Continue reading

Interest Rate Futures | Derivatives | CA Final SFM

 When Forward Interest Rate Agreements are regulated through the “Exchange”, it will become Interest Rate Futures. However, the mechanism of IRF is different from FRA. The system is designed in a manner that interest rate is made up as a marketable product. The following example, will clarify as to how interest rate futures are Continue reading