Short answer: A global depository receipt (GDR) is a negotiable certificate, meaning one that can be bought and sold, issued by an overseas bank. It stands for a set number of shares in a company incorporated in another country, and it can be traded on international stock exchanges. The holder owns the receipt, while the shares themselves stay with a custodian bank.
Last reviewed: 5 November 2026
At a glance
| Term | What it means |
|---|---|
| Underlying shares | The company’s shares that back the receipts, held by a custodian |
| Domestic custodian | The bank in the company’s home country that holds the deposited shares |
| Overseas depository | The foreign bank that issues the receipts against the held shares |
| Ratio | The number of shares one GDR represents, set by the programme’s terms |
| Listing venues | Foreign exchanges such as the London Stock Exchange or Luxembourg Stock Exchange |
| ADR comparison | ADRs are tied to the US market; GDRs can be offered across several markets |
What is a GDR, in simple terms?
Think of a GDR as a receipt for shares you do not hold directly. The receipt is a separate financial instrument that carries a claim linked to a specific number of shares. Its value is tied to those shares, but the certificate itself is what changes hands.
Companies use GDRs to raise money from investors outside India without listing their ordinary shares on a foreign exchange. The receipts let those investors trade in a familiar market, in a familiar form, while the shares remain in India.
How does a GDR issue work, step by step?
An Indian company first decides which of its eligible shares will back the issue. It deposits those shares with a domestic custodian, which is a bank in India that safekeeps them. The custodian keeps the shares on behalf of the arrangement.
The overseas depository bank then issues receipts against the shares held by the custodian. These receipts can be sold to investors and listed on a foreign exchange. Each receipt is linked back to the custodian’s holding, so the pool of shares and the number of receipts stay matched.
Who owns what?
A GDR holder owns the receipt, not the underlying shares. The shares stay with the custodian bank and do not pass to the investor directly. This is the central point to understand, because it determines what the investor actually holds.
The arrangement means your claim runs through the receipt and the depository structure. If you hold a GDR, you should read the programme’s terms to see exactly what rights attach to the receipt.
How many shares does one GDR represent?
One GDR can represent a single underlying share or several shares. The exact ratio is set by the terms of that GDR programme or issue, so it is not the same across all issues.
Here is a hypothetical example, with invented figures for illustration only. Suppose one GDR represents 2 shares, and each share trades at Rs 500 on the company’s home exchange. Then one GDR corresponds to Rs 1,000 of underlying shares (2 × Rs 500). If the ratio were 1 share per GDR, the same receipt would correspond to Rs 500.
Where are GDRs traded?
GDRs can be listed and traded on international stock exchanges, such as the London Stock Exchange or the Luxembourg Stock Exchange. They do not have to trade on the company’s home exchange in India. That is the main reason they give the company access to investors abroad.
Trading in a foreign venue can mean different trading hours, different settlement arrangements and different rules from the home market. Those differences are set by the venue and the programme, so they vary from issue to issue.
How is a GDR different from an ADR?
An American depositary receipt (ADR) is a similar instrument, but it is tied to the United States market. A GDR, by contrast, can be offered and traded across several international markets. The basic structure is similar, and the difference lies mainly in where the receipt is sold.
For an investor, this means the choice of receipt determines which market you trade in. The underlying company is the same either way, but the listing venue, currency arrangements and local rules can differ.
What moves a GDR’s price?
A GDR price generally moves with the price of the underlying shares. If the shares rise or fall on the home exchange, the receipt usually follows. This link is the reason the receipt is valued the way it is.
The price also responds to other forces. These include demand for the receipt itself, the company’s performance, currency movements and global sentiment, meaning the general mood of investors across markets. As a result, a GDR can move by an amount that does not match the share price on any given day.
What are the catches and risks?
The first catch is that the receipt is not the share. You do not own the underlying shares directly, so your position depends on the custodian and the depository structure working as described. Those are additional links in the chain that a direct shareholder does not have.
The second catch is that the price can move for reasons beyond the company’s shares. If demand for the receipt falls while the shares are steady, the receipt can still lose value. Currency movements and global sentiment add further sources of movement that a domestic share may not face in the same way.
Finally, the terms of each programme decide the ratio, the rights attached and the venue. Two GDRs for the same company can differ in these details, so the terms should be checked for each one.
Frequently asked questions
Is a GDR the same as owning shares?
No. A GDR holder owns the receipt, while the underlying shares stay with a custodian bank rather than passing to the investor directly.
Can a GDR be traded outside India?
Yes. GDRs can be listed and traded on international stock exchanges, such as the London Stock Exchange or the Luxembourg Stock Exchange, rather than on the company’s home exchange.
How do I know how many shares one GDR represents?
The ratio is set by the terms of that GDR programme or issue. One GDR can represent a single share or several shares, so the programme’s terms are the place to check.
Why might a GDR price differ from the share price?
GDR prices generally move with the underlying shares, but they also respond to demand, company performance, currency movements and global sentiment. Those factors can move the receipt by an amount that does not match the share price.
Sources and last check
Facts in this article were checked against the sources below on 5 November 2026. Rules and figures can change; check the primary source before acting.
- upstox.com (broker education)
- kotakneo.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.
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