Strategic Management and Corporate Finance · Sources of Corporate Funding

Global and Public Market Funding Routes: ADR, GDR, Deposits, IPO, QIP

Updated 11 October 2026 · Fact-checked

Global and public market funding means raising money from international investors through depository receipts (ADRs, GDRs), or from the Indian public and institutions through public deposits, IPOs and QIPs. Solve questions by naming the route, its regulator, who can invest, key conditions and compliance steps, then apply them to the facts.

Understand Global and Public Market Funding Routes

A company can raise money from different pools of investors. Some are abroad. Some are the Indian public. Some are large institutions. Each pool has its own route and its own regulator.

A depository receipt (DR) lets foreign investors hold Indian shares without buying them directly. An Indian company deposits shares with a domestic custodian. An overseas depository bank then issues receipts against those shares. The receipts trade abroad. An ADR is a receipt listed or traded in the United States. A GDR is issued in more than one country, usually on European or other international markets. The company gets foreign currency funds, widens its investor base and gains visibility.

Public deposits are money a company accepts from the public, and from members, as deposits. The Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 control them. Eligible companies must follow limits, issue a circular or advertisement, provide deposit insurance where required, and keep a liquid asset reserve. Money the rules treat as exempt is not a deposit, so always check the exclusions.

An IPO is the first time an unlisted company offers shares to the public. SEBI's ICDR Regulations and the Companies Act govern it. The company files an offer document, fixes price by fixed price or book building, allots shares and lists them on a stock exchange. A QIP is a quicker route for an already listed company. It sells equity shares or eligible securities only to qualified institutional buyers, without a fresh prospectus. It has pricing and allotment conditions in the ICDR Regulations.

In the exam, think in this order: route, who issues, who invests, regulator, conditions, then risks and benefits. This gives you a structure for any case question.

Key rules to remember

ADR vs GDR: ADR = receipts for US market; GDR = receipts for markets outside the home country, often in more than one country; Both are negotiable instruments representing Indian shares held by a domestic custodian. Market, listing and investor base are the main contrasts.
Depository receipt chain: Company shares → domestic custodian → overseas depository → DRs → foreign investors; Use this chain to explain the mechanics in any answer.
QIP investors: QIP allottees = qualified institutional buyers only; Applicable to listed companies. Retail investors cannot subscribe through a QIP.
IPO route: Offer document → price discovery (fixed price or book building) → allotment → listing; Add the eligibility conditions and post-issue compliances from the ICDR Regulations.
Public deposit check: Is it a deposit? → Is the company eligible? → Within limits? → Circular, deposit insurance and liquid assets complied with?; Exact limits and percentages must be taken from the Act and the 2014 Rules as in your study material. Do not quote them from memory.

How to solve Global and Public Market Funding Routes questions

Use the same structure for every question on this topic, whether it is theory or a case.

1Identify the route asked: ADR, GDR, public deposit, IPO or QIP.
2State the meaning in one or two lines, with who issues and who invests.
3Name the governing law and regulator: Companies Act, 2013 and the Deposit Rules, SEBI ICDR Regulations, FEMA and RBI for foreign routes.
4List the key conditions or eligibility. Match each condition to the facts given.
5Describe the process in order: approvals, documents, pricing, allotment, listing or filing.
6Add advantages and limitations only if asked or if marks are for evaluation.
7Conclude with a clear finding for case questions: permitted, not permitted, or permitted subject to named conditions.

Quickest way: Route–Regulator–Investor–Condition grid

When to use it: When time is short and you need a compact, structured answer.

Write the route name and a one-line meaning.
Write the regulator and law next to it.
Write the investor type: foreign investors, public, or QIBs.
Write two or three core conditions and one process line.
Finish with a one-line conclusion tied to the facts.

Common mistakes in Global and Public Market Funding Routes

Saying ADR and GDR are different kinds of shares.
The names sound like separate securities.
Fix: Say they are receipts issued by an overseas depository against Indian shares held by a custodian. They differ mainly in market and listing.
Treating a QIP as open to all investors.
It is confused with a public issue.
Fix: State that only qualified institutional buyers can be allotted securities, and only a listed company can use it.
Quoting deposit limits and conditions from memory.
Students mix up deposit rules with other borrowing provisions.
Fix: State the structure (circular, insurance, liquid assets, limits) and use exact figures only from the Act and Rules.
Ignoring FEMA and RBI in foreign routes.
Students focus only on the Companies Act and SEBI.
Fix: Mention FEMA and RBI for foreign currency issues, along with SEBI and company law.
Treating all money received as a deposit.
Students skip the exclusions.
Fix: First check whether the receipt is excluded from the deposit definition under the Rules.
Writing only definitions in a case question.
Students recall notes instead of analysing.
Fix: Apply each condition to the facts and end with a conclusion.

Worked examples

Example 1

Bharat Auto Ltd, an Indian company, wants to raise foreign currency funds without issuing shares directly to foreign investors. Explain how it can do so through depository receipts and state how an ADR differs from a GDR.

Show the solution

Route: Bharat Auto can issue depository receipts. Foreign investors then hold receipts instead of shares directly.
Mechanism: the company deposits its shares with a domestic custodian. An overseas depository bank issues receipts against them. The receipts are listed or traded abroad.
Benefit: the company gets foreign currency funds and a wider investor base. Investors trade in their own market and currency.
Regulation: the issue must comply with the Companies Act, 2013, FEMA and RBI rules for foreign issues.
Difference: an ADR is issued for the US market. A GDR is issued for markets outside the home country and can be offered in more than one country.

Answer: Bharat Auto can issue DRs through a custodian and an overseas depository. An ADR targets the US market, while a GDR targets international markets in more than one country, subject to FEMA, RBI and company law compliance.

Example 2

Sundaram Textiles Ltd is listed on the National Stock Exchange. It wants to raise equity quickly from mutual funds and insurance companies without a fresh prospectus. Can it use a QIP?

Show the solution

Identify the route: QIP, a placement of equity shares or eligible securities to qualified institutional buyers.
Check the issuer: the company is listed, so the basic condition is met.
Check the investors: mutual funds and insurance companies are qualified institutional buyers, so they can be allotted securities.
Check the process: a QIP does not need a fresh prospectus. It uses a placement document and follows the ICDR pricing and allotment conditions.
Note compliance: the company must also follow the Companies Act, 2013 and SEBI listing requirements.

Answer: Yes. Sundaram Textiles can use a QIP because it is listed and the proposed investors are QIBs. It must follow the ICDR conditions and issue a placement document instead of a prospectus.

Exam tips

Write the regulator beside each route. Examiners look for the legal base.
For ADR versus GDR questions, use a short two-column list in bullets, covering market, listing and investor base.
In case questions, tie each condition to a fact in the question before concluding.
Use exact deposit limits and QIP pricing figures only from your study material. If unsure, describe the rule in words.
Link this topic to IPO process and FEMA topics. Questions often combine them.

Practice questions from Sources of Corporate Funding

Global and Public Market Funding Routes: frequently asked questions

What is the difference between ADR and GDR?

Both are depository receipts representing shares held by a custodian. An ADR is issued for the US market, while a GDR is issued for international markets and can be offered in more than one country.

Who can invest in a QIP?

Only qualified institutional buyers, such as mutual funds, insurance companies and certain financial institutions. A QIP is open only to listed companies and does not need a fresh prospectus.

Which law governs public deposits?

The Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. They set eligibility, circular, insurance and liquid asset conditions. Check the exact limits in your study material.

Is an IPO the same as a QIP?

No. An IPO is the first public offer by an unlisted company, open to the public, with an offer document. A QIP is by a listed company, to QIBs only, with a placement document.