A depository receipt is a negotiable financial instrument issued by a bank to represent a foreign company’s publicly traded securities. Depository receipts let U.S. investors, for example, purchase shares in Indian companies in a more convenient and less expensive manner than purchasing stocks in foreign markets. Depository receipts that are listed and traded in the United States are American depository receipts (ADRs). European banks issue European depository receipts (EDRs), and other banks issue global depository receipts (GDRs).

A typical ADR goes through the following steps before it is issued:

  • The issuing bank in the U.S. studies the financials of the foreign company in detail to assess the strength of its stock.
  • The bank buys shares of the foreign company.
  • The shares are grouped into packets.
  • Each packet is issued as an ADR through an American stock exchange.
  • The ADR is priced in dollars, and the dividends are paid out in dollars as well, making it as simple for an American investor to buy as the stock of a U.S.-based company.


Participatory Notes commonly known as P-Notes or PNs are instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator, the Securities and Exchange Board of India – SEBI.

FIIs are not allowed to issue P Notes to Indian nationals, POIs and corporate bodies majorly owned by NRIs. 


  • “Principles & Practices of Banking”, Tata McGraw-Hill, New Delhi.
  • My Virtual Guru –
  • “Indian Economy “, Sankarganesh Karuppiah, Kavin Mukul Publications.
  • wikipedia.

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