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Which statement correctly distinguishes an Indian Depository Receipt (IDR) from a GDR issued by an Indian company?

An IDR is issued in India by a foreign company, denominated in rupees, and is backed by the company's equity shares held with an overseas custodian. It brings foreign issuers to Indian investors, which is the reverse of a GDR or ADR issued by an Indian company abroad.

  1. AAn IDR is issued in India by a foreign company, against its underlying equity shares held by an overseas custodianCorrect
  2. BAn IDR is issued outside India by an Indian company against shares held by a domestic custodian
  3. CAn IDR is a debt instrument issued by the Government of India to foreign investors
  4. DAn IDR can be issued only by an Indian company listed on a US exchange

Explanation

An IDR is a rupee-denominated instrument issued in India by a foreign company that holds its underlying equity shares with an overseas custodian. The second option describes a GDR or ADR, which is the reverse flow. The other options misstate the nature and issuer of an IDR.

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