Unit - 7: Role of Exim Bank, RBI, Exchange Control of India - FEMA , FEDAI and Others
CAIIB-BFM-MODULE-A-Role of Exim Bank, Reserve Bank of India, Exchange Control in India - FEMA and FEDAI and Others-Cont'd Role of Exim Bank, Reserve Bank of India, Exchange Control in India - FEMA and FEDAI and Others ADRs American Depository Receipts are Receipts or Certificates issued by US Bank representing specified number of shares of non-US Companies. defined as under: These are issued in capital market of USA alone. These represent securities of companies of other countries. These securities are traded in US market. The US Bank is depository in this case. ADR is the evidence of ownership of the underlying shares.
Unsponsored ADRs It is the arrangement initiated by US brokers. US Depository banks create such ADRs. The depository has to Register ADRs with SEC (Security Exchange Commission).
Sponsored ADRs Issuing Company initiates the process. It promotes the company’s ADRs in the USA. It chooses single Depository bank. Registration with SEC is not compulsory. However, unregistered ADRs are not listed in US exchanges.
GDRs Global Depository Receipt is a Dollar dominated instrument with following features: Traded in Stock exchanges of Europe. Represents shares of other countries. Depository bank in Europe acquires these shares and issues “Receipts” to investors. GDRs do-not carry voting rights. Dividend is paid in local currency and there is no exchange risk for the issuing company. Issuing Co. collects proceeds in foreign currency which can be used locally for meeting Foreign exchange requirements of Import. GDRS are normally listed on “Luxembourg Exchange “ and traded in OTC market London and private placement in USA. It can be converted in underlying shares.
IDRs Indian Depository Receipts are traded in local exchanges and represent security of Overseas Companies.
CDF (Currency Declaration Form) CDF is required to be submitted by the person on his arrival to India at the Airport to the custom Authorities in the following cases: If aggregate of Foreign Exchange including Foreign currency/TCs exceeds USD 10000 or its equivalent. If aggregate value of currency notes (cash portion) exceeds USD 5000 or its equivalent.
Interest Subvention on Export Credit @2% Reserve Bank of India has now decided to extend the interest subvention of 2% on rupee export credit for the period 1.4.2012 to 31.3.2013 on the same terms and conditions to the following sectors: i. Handicrafts ii. Carpet iii. Handlooms iv. Small and Medium Enterprises (SMEs) v. Readymade Garments vi. Processed Agriculture Products vii. Sport Goods viii. Toys Interest subvention of up to 2% may be allowed on pre-shipment credit up to 270 days and post-shipment credit up to 180 days on the outstanding amount for the period 1.4.2012 to 31.3.2013 to the above mentioned sectors subject to the condition that the rate of interest shall not fall below 7% after allowing the aforesaid subvention. Further, it should be ensured that the benefit of interest subvention is passed on completely to the eligible exporters.