Considering allowing depositary receipts on Indian stocks: IFSCA chief

The International Financial Services Centre Authority (IFSCA) is mulling allowing sponsored and unsponsored depositary receipts (DRs) based on Indian stocks, said Injeti Srinivas, chairman of the regulatory body.

Srinivas was speaking unveiling the new identity of Gift Nifty, earlier known as SGX Nifty—derivatives contracts of the Nifty index traded on Singapore Exchange (SGX).

Srinivas said allowing DRs will shift foreign investor flows coming through the participatory note (pnotes) route.

"Today, many foreign investors don't want to enter into the Indian capital market and comply with those requirements by engaging with the capital market indirectly through p-notes. But once you have the DRs and unsponsored DRs, we expect this to replace the pnote route. And add a lot of transparency and visibility to the capital markets,” said Srinivas.

 

Gift City currently offers derivatives, debt products and UDRs of some foreign companies.

Under a UDR programme, shares of any company can be traded at a venue without the company’s intervention.

Srinivas also said that IFSCA is coming with a single-window system to promote the ease of doing business. And said the platform would provide not only the clearance of IFSCA but also the clearance and approval accorded by other regulators, including domestic agencies.

"The primary idea behind this is to onshore the international financial services carried out offshore by Indian entities. Even now, many Indian entities are procuring their international financial services through offshore centres,” said Srinivas.

Srinivas said IFSCA aims to develop IFSC as a global gateway for inbound and outbound requirements of international financial services.

"Given the growing influence of international investors in India's growth story, Gift Nifty plays a catalytic role in accessing broad representation of Indian equities,” said Srinivas.

Srinivas said foreign banks are interested in setting up shop in GIFT IFSC.

"More than 10 foreign banks and equivalent numbers are already at different stages of application,” said Srinivas.

"We are fast emerging as the preferred destination not only to meet the requirements of India but of  South Asia, and maybe in years to come beyond South and south-east Asia,' said Srinivas.

The new logo of GIFT Nifty was unveiled as a part of the full-scale transition of SGX Nifty to Gift Nifty from July 3, 2023.