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RBI Tightens ADR/GDR Voting Rules for Banks

Current · Source: Reserve Bank of India · RBI/2006-2007/247 · issued 05 Feb 2007 · ~1 min read
Quick answerRBI now requires banks issuing ADRs/GDRs to submit their Depository Agreements and give an undertaking that depositories won't vote in contravention of the agreement, nor change terms without RBI approval.
The rule, in the simplest words
How it plays out — a real example

A payments & clearing officer in Indore, Priya, is updating her bank's compliance files. She finds the old depository agreement from when the bank issued GDRs last year. She emails a copy to RBI, attaches a signed undertaking that the bank won't allow the depository to vote against the agreement, and notes in her calendar to ask RBI before any future changes to that document.

What changed

RBI has examined corporate governance aspects of ADR/GDR issuances and now mandates that banks furnish a copy of the Depository Agreement to RBI. Banks must also undertake that they will not recognize any voting by the depository that violates the agreement, and that no changes to the agreement will be made without prior RBI approval.

What it means for you

This ensures depositories cannot interfere in bank management through voting rights, strengthening corporate governance. Banks must now proactively share these agreements and seek RBI's nod for any amendments, adding a compliance layer to ADR/GDR fundraising.

What you must do

Who it affects

All scheduled commercial banks (excluding RRBs) that have issued or plan to issue ADRs/GDRs

❓ Common questions

Why is RBI asking for the Depository Agreement?

To examine corporate governance aspects and ensure depositories do not interfere in bank management through voting rights.

What happens if a depository votes against the agreement?

Banks must not recognize such voting and must give an undertaking to RBI to this effect.

Can we modify the Depository Agreement later?

No changes are allowed without prior approval from RBI.

📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/247 DBOD.No.PSBD. 7269/16.13.100 /2006-07 February 5, 2007 All scheduled commercial banks (excluding RRBs) Dear Sir, Issue of American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) – Depository Agreement In the recent past, some banks have raised funds through issue of American Depository/Global Depository Receipts. Under such a mechanism, banks issue shares to the depositories who in turn issue ADRs/GDRs to the ultimate investors. Banks generally enter into an agreement with the depository to the effect that the depository would not exercise voting rights in respect of the shares held by them or they would exercise voting rights as directed by the Board of Directors of the bank. 2. The matter relating to exercise of voting rights by the depositories has been examined by RBI from the angle of corporate governance. In this context, banks are advised to furnish to Reserve Bank a copy each of the Depository Agreements entered into by them with the depositories. Further, to eliminate possibility of any interference of the depositories in the management of the bank, banks should give an undertaking to Reserve Bank that (i) they would not give cognizance to voting by the depository, should the depository vote in contravention of its agreement with the bank; (ii) no change would be made in terms of the Depository Agreement without prior approval of RBI. Yours faithfully, (P. Vijaya Bhaskar) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/247 · issued 05 Feb 2007. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks (excluding RRBs) that have issued or plan to issue ADRs/GDRs), your first concrete step on “RBI Tightens ADR/GDR Voting Rules for Banks” is: “Submit a copy of the Depository Agreement to RBI immediately if you have issued ADRs/GDRs.” (RBI issued this 05 Feb 2007).

  1. Circular: RBI/2006-2007/247 -- RBI Tightens ADR/GDR Voting Rules for Banks
  2. Issued: 05 Feb 2007
  3. Action required: Submit a copy of the Depository Agreement to RBI immediately if you have issued ADRs/GDRs.
  4. Action required: Provide a written undertaking to RBI that you will not recognize depository voting that contravenes the agreement.
  5. Action required: Ensure no changes to the Depository Agreement are made without prior RBI approval.
  6. Action required: Review existing agreements to confirm compliance with these new requirements.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3270&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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