India Sets Rules for Overseas Companies Raising Local Funds

July 22 (Bloomberg) -- Overseas companies selling Indian Depositary Receipts must repatriate the money from the country immediately, the Indian central bank said, setting rules for foreign companies seeking to tap the nation’s stock markets.

The IDRs, denominated in rupees and issued by a depositary in India on behalf of an overseas company, won’t be redeemable to investors before the end of one year from the date of issue, the central bank said in a statement on its Web site today.

Foreign institutional investors and non-resident Indians will be allowed to trade in them, while foreign banks operating in India must seek approval to issue the securities, the central bank said. Automatic fungibility, or interchangeability, between the IDRs and the underlying shares won’t be permitted.