NO LOAN AGAINST IDR-RBI

Reserve Bank of India has issued a circular about loans and advance against the Indian Depositorty receipts. RBI gives the clear instruction about loans on IDR, as some companies got the approval of loans against IDR but now no company will get the permission to get the approval of loans against IDR. Full notification is as under.

RBI/2010-11/ 543
DBOD. Dir.BC. 96 /13.03.00/2010-11

May 25, 2011

All Scheduled Commercial banks
(Excluding RRBs)

Dear Sir / Madam

Finance for and Loans/Advances against IDRs

In terms of Foreign Exchange Department circular A.P (DIR Series) Circular No.5 dated July 22, 2009, eligible companies resident outside India have been permitted to issue Indian Depository Receipts (IDRs) through a domestic depository, subject to terms and conditions indicated therein.

2. The matter regarding extending of finance for subscription to the IDRs and loans thereagainst has been examined. It has been decided that no bank should grant any loan/advance for subscription to IDRs. Further, no bank should grant any loan/advance against security/collateral of IDRs issued in India.

Yours faithfully

(B. Mahapatra)
Chief General Manager-in-Charge

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