RBI allows 100% FDI in other financial services

The Dollar Business Bureau

The Reserve Bank of India (RBI), in consultation with the government, has decided to allow foreign investment up to 100% under the automatic route in other financial services.

Other financial services here refers to financial activities that are regulated by any financial sector such as RBI, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Pension Fund Regulatory and Development Authority, National Housing Bank or any other financial sector regulator as may be notified by the Government.

The principal regulations permits foreign investments up to 100%, under the automatic route, in Non-Banking Finance Companies (NBFCs) engaged in the 18 activities. Any such foreign investment shall be subject to conditions, including minimum capitalisation norms, as specified by the concerned regulator or the government agency.

Listing out the features of this revised regulatory framework, the RBI said, “In financial services activities, which are not regulated or partly regulated by any financial sector regulator or where there is lack of clarity regarding regulatory oversight, foreign investment will be allowed up to 100% under the Government approval route.”

“Downstream investment by any entity engaged in ‘Other Financial Services” will be subject to extant sectoral regulations and provisions of Principal Regulations,” the banking body said.