The government today operationalised the scheme for providing two-way fungibility for American Depository Receipts and Global Depository Receipts. The Securities and Exchange Board of India has been made the regulatory authority for the market.
The two separate notifications issued by the RBI and finance ministry today says the transfer of shares into and out of ADR/GDR will be distinct from portfolio investment by FIIs. Fungibility of shares between overseas holdings and local markets was meant to the domestic markets more broad based and was promised in the budget for 2001-02.
Under the scheme ADRs/GDRs issued against Indian companies may be converted to domestic shares of the companies and may again be re-converted to ADRs/GDRs, but being subject to sectoral caps wherever applicable.
The RBI notification says since the buy and sell operations will not require company involvement or fresh permission to issue ADR/GDR
