Govt notifies 100% FDI in other financial services

The Dollar Business Bureau

The Ministry of Commerce and Industry on Tuesday notified 100% FDI in 'other financial services' carried out by non-banking finance companies (NBFCs). This move will help in attracting foreign investment into the country.

“The government has liberalised its FDI policy in Other Financial Services and non-banking finance companies (NBFCs), the Department of Industrial Policy & Promotion (DIPP) said in a release. 

Other financial services will consist of activities which are under the regulation of any financial sector regulator such as RBI, IRDA, SEBI, National Housing Bank, Pension Fund Regulatory and Development Authority, or any other regulator in the financial sector as may be notified in this regard by the government, the release said. 

However, these types of foreign investment would be subject to some conditionalities, such as minimum capitalisation norms, as mentioned by the concerned regulatory body or government agency, it said. 

However, the release did not mention the sectors that have been opened up for the automatic route. 

Currently, the regulations on NBFCs specify that FDI would be permitted on automatic route for just 18 mentioned NBFC activities after completing the prescribed minimum capitalisation norms specified therein. 

In his Budget speech 2016-17, Finance Minister Arun Jaitley had stated about this relaxation. 

Presently, 100% FDI via automatic route is allowed in 18 NBFC activities that include merchant banking, portfolio management services, under writing, stock broking and financial consultancy. 

In the last fiscal, FDI in India rose by 29% year-on-year to $40 billion.