India’s ground breaking review of depository receipts (DRs) scheme could open the door for increased foreign investment, BNY Mellon, a Global Investment company, has said.
This is positive news both for India and those investing in Indian securities, according to Neil Atkinson, Asia Pacific Head for Depository Receipts at BNY Mellon.
It should promote greater integration of the Indian financial system with international capital markets, he noted.
“The introduction of a new scheme for DR will provide global investors with convenient access to Indian companies, who in turn can attract foreign investment through this flexible and cost efficient securities product.
In permitting non-capital-raising DRs, India would join more than 60 countries worldwide whose companies have established non-capital raising DR programme investors”, Atkinson said in a statement on Wednesday, a day after the Sahoo panel report was made public by the Finance Ministry.
Sahoo Panel was set up by the Finance Ministry in September 2013 to undertake a comprehensive review of the depository receipt mechanism scheme put in place in India in 1993.
Atkinson said there is significant international demand for Indian equity and greater access to DRs may meet some of the demand not satisfied through routes previously available.
While it could be argued that the importance of DRs has subsided since India’s onshore market has developed, DRs remain an attractive route for foreign investment into India, Atkinson said.
Srivats.kr@thehindu.co.in