⚡ Topic 05 of 5 · Chapter 06 · Quick Revision
ECB, ADR, GDR & Quick Revision
External Commercial Borrowings, American Depositary Receipts, Global Depositary Receipts, and complete revision.
📊 External Commercial Borrowings (ECB)
ECB are loans raised by Indian companies from foreign sources. They are a way for Indian companies to access cheaper foreign capital.
- Regulated by: RBI
- Minimum maturity: 3 years
- Used for: Capital expenditure, infrastructure, import of capital goods
- NOT allowed for: Real estate, stock market investment, working capital
📊 ADR and GDR
| Feature | ADR (American Depositary Receipt) | GDR (Global Depositary Receipt) |
|---|---|---|
| Listed on | US stock exchanges (NYSE, NASDAQ) | European stock exchanges (London, Luxembourg) |
| Currency | US Dollars | US Dollars or Euros |
| Investors | American investors | Global investors |
| Purpose | Indian companies raise capital from US investors | Indian companies raise capital from global investors |
| Examples | Infosys ADR on NYSE | Wipro GDR on London Stock Exchange |
⭐ How ADR/GDR Works: An Indian company deposits its shares with a custodian bank in India. The custodian bank issues receipts (ADR/GDR) to foreign investors. Foreign investors buy these receipts and get the economic benefits of owning Indian shares without directly buying them on Indian exchanges.
✅ Complete Chapter 06 Revision Checklist
✅ Money market = short-term funds (up to 1 year)
✅ T-Bills: issued by Government; maturities 91, 182, 364 days; zero coupon
✅ Commercial Paper: issued by corporates; minimum ₹5 lakh
✅ Certificate of Deposit: issued by banks
✅ Call Money = overnight borrowing between banks
✅ Capital market = long-term funds (more than 1 year)
✅ SEBI established 1988; statutory powers SEBI Act 1992
✅ BSE established 1875 (oldest in Asia); index = Sensex (30 stocks)
✅ NSE established 1992; index = Nifty 50 (50 stocks)
✅ Primary market = new securities (IPO, FPO)
✅ Secondary market = existing securities traded
✅ FDI = management control (≥10% equity); stable, long-term
✅ FPI = no management control (<10% equity); volatile, “hot money”
✅ FDI regulated by DPIIT; FPI regulated by SEBI
✅ ECB = loans from foreign sources; regulated by RBI; min 3-year maturity
✅ ADR = listed on US exchanges; GDR = listed on European exchanges
✅ Mutual funds regulated by SEBI; AMFI = industry body
✅ T-Bills: issued by Government; maturities 91, 182, 364 days; zero coupon
✅ Commercial Paper: issued by corporates; minimum ₹5 lakh
✅ Certificate of Deposit: issued by banks
✅ Call Money = overnight borrowing between banks
✅ Capital market = long-term funds (more than 1 year)
✅ SEBI established 1988; statutory powers SEBI Act 1992
✅ BSE established 1875 (oldest in Asia); index = Sensex (30 stocks)
✅ NSE established 1992; index = Nifty 50 (50 stocks)
✅ Primary market = new securities (IPO, FPO)
✅ Secondary market = existing securities traded
✅ FDI = management control (≥10% equity); stable, long-term
✅ FPI = no management control (<10% equity); volatile, “hot money”
✅ FDI regulated by DPIIT; FPI regulated by SEBI
✅ ECB = loans from foreign sources; regulated by RBI; min 3-year maturity
✅ ADR = listed on US exchanges; GDR = listed on European exchanges
✅ Mutual funds regulated by SEBI; AMFI = industry body