โก Topic 05 of 5 ยท Chapter 06 ยท Quick Revision
ECB, ADR, GDR & Quick Revision
External Commercial Borrowings, American Depositary Receipts, Global Depositary Receipts, and complete revision.
๐ 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
๐ 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 |
โญ 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.
โ Complete Chapter 06 Revision Checklist
โ
Money market = short-term funds (up to 1 year)
โ T-Bills: issued by Government; maturities 91, 182, 364 days; zero coupon
โ Commercial Paper: issued by corporates; minimum โน5 lakh
โ Certificate of Deposit: issued by banks
โ Call Money = overnight borrowing between banks
โ Capital market = long-term funds (more than 1 year)
โ SEBI established 1988; statutory powers SEBI Act 1992
โ BSE established 1875 (oldest in Asia); index = Sensex (30 stocks)
โ NSE established 1992; index = Nifty 50 (50 stocks)
โ Primary market = new securities (IPO, FPO)
โ Secondary market = existing securities traded
โ FDI = management control (โฅ10% equity); stable, long-term
โ FPI = no management control (<10% equity); volatile, “hot money”
โ FDI regulated by DPIIT; FPI regulated by SEBI
โ ECB = loans from foreign sources; regulated by RBI; min 3-year maturity
โ ADR = listed on US exchanges; GDR = listed on European exchanges
โ Mutual funds regulated by SEBI; AMFI = industry body
โ T-Bills: issued by Government; maturities 91, 182, 364 days; zero coupon
โ Commercial Paper: issued by corporates; minimum โน5 lakh
โ Certificate of Deposit: issued by banks
โ Call Money = overnight borrowing between banks
โ Capital market = long-term funds (more than 1 year)
โ SEBI established 1988; statutory powers SEBI Act 1992
โ BSE established 1875 (oldest in Asia); index = Sensex (30 stocks)
โ NSE established 1992; index = Nifty 50 (50 stocks)
โ Primary market = new securities (IPO, FPO)
โ Secondary market = existing securities traded
โ FDI = management control (โฅ10% equity); stable, long-term
โ FPI = no management control (<10% equity); volatile, “hot money”
โ FDI regulated by DPIIT; FPI regulated by SEBI
โ ECB = loans from foreign sources; regulated by RBI; min 3-year maturity
โ ADR = listed on US exchanges; GDR = listed on European exchanges
โ Mutual funds regulated by SEBI; AMFI = industry body