The Depository Receipts Scheme, 2014: Lessons in Policy Implementation

Abstract

Contemporary financial policy making in India is undergoing a sea-change. Hitherto opaque processes are becoming more transparent. More lawyers are involved at the policy formulation stage and in converting them into precise legal drafts. This article illustrates the various factors affecting contemporary financial policy making in India and its implementation, in light of the experience from the recent depository receipt reforms. It analyses the political economy that shaped the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993, and argues that the skewed sectoral preference evident therein was not based on sound economic and regulatory policies. Finally, it concludes that the conceptualisation of the policy behind the Depository Receipts Scheme, 2014 through an expert committee has been extremely transparent and progressive. However, a major challenge in the co-ordination of a multi-pronged implementation strategy remains in the form of a diffused governmental and regulatory set-up, which creates obstacles in the implementation of policies.

Keywords: Depository receipt, ADR, GDR, Sahoo Committee, Financial policy, Cross listing, Overseas listing