Government allows 100% FDI in ‘other financial services’ by NBFCs

NEW DELHI: The government has allowed 100% foreign direct investment (FDI) in ‘other financial services’ carried out by non-banking finance companies ( NBFCs), continuing with the liberalisation of the overseas investments regime.

“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 press note on Tuesday.

Other financial services will include activities which are regulated by any financial sector regulator — RBI, SEBI, IRDA, Pension Fund Regulatory and Development Authority, National Housing Bank “or any other financial sector regulator as may be notified by the government in this regard”, it said.

The investment would, however, be subject to sector conditions such as minimum capitalisation norms specified by the regulator or government agency concerned.

Under the current rules, 100% FDI is allowed through automatic route for 18 specified NBFC activities that include merchant banking, stock broking, credit rating, housing finance and rural credit.

In the Budget 2016-17 speech, Finance Minister Arun Jaitley had announced about this liberalisation. “FDI will be allowed beyond the 18 specified NBFC activities in the automatic route in other activities which are regulated by financial sector regulators,” FM had said in his budget speech.