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Standard XI
Business Studies
Public Deposit
Q. Consider t...
Question

Q. Consider the following statements in reference to India Depository receipts(IDR)

Which of the statements given above is/are correct?


A
1 only
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B
2 only
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C
Both 1 and 2
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D
Neither 1 nor 2
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Solution

The correct option is C Both 1 and 2

Explanation:

  • Statement 1 is correct: An IDR is an instrument denominated in Indian Rupees in the form of a depository receipt created by a Domestic Depository (custodian of securities registered with the Securities and Exchange Board of India) against the underlying equity shares of issuing company to enable foreign companies to raise funds from the Indian securities Markets.
  • Statement 2 is correct: The following are the requirements for investing in IDRs
  1. IDRs can be purchased by any person who is resident in India as defined under FEMA.
  2. Minimum application amount in an IDR issue shall be Rs. 20,000.
  3. Investments by Indian companies in IDRs shall not exceed the investment limits, if any, prescribed for them under applicable laws.

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