Discuss the financial instruments used in an international financing



Variolas financial instruments used in international financing include
(i) International Depository Receipt (IDR) It 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 SEBI) against the underlying equity of issuing company. It enables foreign companies to raise funds from the Indian Securities Markets.
The foreign company IDRs will deposit shares to an Indian Depository. The depository would issue receipts to investors in India against these shares. The benefit of underlying shares (like bonus, dividends, etc) would accrue to the depository receipt holders in India.
(ii) Global Depository Receipt (GDR) It is the depository receipt denominated in US dollars issued by depository hank to which the local currency shares of a company are delivered. GDR is a negotiable instrument and can he traded freely like any other security. In the Indian context, a GDR is an instrument issued abroad by an Indian company to raise funds in some foreign currency and is listed and traded on a foreign stock exchange.
(iii) American Depository Receipt (ADR) It is depository receipt issued by a company in the USA are known as American Depository Receipts. ADR is bought and sold in American markets like regular stocks. ADR is similar to a GDR except that it can be issued only to American citizens and can be listed and traded on a stock exchange of the USA.