Monday, August 4, 2014

Global Depository Receipts (GDRs)

It is a negotiable certificate denominated in US dollars which represent a Non-US company’s publically traded local currency equity shares. GDRs are created when the local currency shares of an Indian company are delivered to Depository receipts in US dollars. The GDRs may be traded freely in the overseas market like any other dollar –expressed security either on a foreign stock exchange or in the over-the-counter market or among qualified institutional buyers.

By GDRs , Indian companies are able to tap global market to raise foreign currency funds by way of equity. It has distinct over debt as there is no repayment of the principal & service costs are lower.

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