The Union government has expressed surety about letting the Indian companies list directly on stock exchanges overseas and GIFT International Financial Services Centre (IFSC). This step pursues allowing domestic companies access to global capital and better valuation.
Indian companies, at present, can solicit funds abroad through American Depository Receipts (ADR) and Global Depository Receipts (GDR). The government first expressed its desire for abroad listing in 2020 as part of a pandemic relief package, which now seems to culminate in reality.
“A direct listing of securities by domestic companies will now be permissible in foreign jurisdictions,” finance minister Nirmala Sitharaman said.
“I am also pleased to announce that the government has taken a decision to enable the direct listing of listed and unlisted companies on the IFSC exchange. So, this is a major step forward. This will facilitate access to global capital and better valuation.”
The minister shared the developments at the launch of AMC repo clearing and a corporate debt market development fund (CDMDF) to help bolster the corporate bond market. The ₹33,000 crore fund accumulated from mutual funds’ debt schemes targets providing liquidity to debt schemes at the time markets are stressed.
The AMC Repo Clearing Ltd (ARCL) for the unversed is a limited-purpose clearing corporation having support from Sebi and funded by asset management companies. For each deal in corporate debt securities performed on the NSE and BSE as part of a tri-party repo, it offers clearing and settlement services.
AMCs, insurance companies, market makers, and short-term traders will all benefit from using the platform to take positions and manage their risks in listed corporate bonds and debentures, commercial papers, and certificates of deposit.
Coming back again on listing details, a senior finance ministry official present at the event also confirmed a notification would soon be issued, and going ahead, a few foreign jurisdictions would find their names in the permissible list.
Both the domestic bourses — BSE and the National Stock Exchange (NSE)—are there in GIFT IFSC and, at the same time, some of the Indian and foreign banking entities. Lately, GIFT IFSC made headlines for Gift Nifty derivatives clocking record volumes.
Gift Nifty offers doorways to Gift Nifty 50, Gift Nifty Bank, Gift Nifty Financial Services, and Gift Nifty IT derivatives contracts. Notably, these contracts are accessible for almost 21 hours, overlaying Asia, Europe, and US trading hours.