FDI norm relaxation for asset reconstruction companies to smoothen capital inflows

NEW DELHI: Liberalisation of FDI norms for asset reconstruction companies (ARCs) will help bring in the much-needed foreign capital to deal with stressed assets and revitalise the financial sector, says tax consultancy KPMG.

" DIPP has issued a press note liberalising foreign investment limits for ARCs and security receipts. This will help in the flow of the much-needed foreign capital to deal with the stressed assets and thereby revitalise the financial sector," KPMG said in a statement.

The Department of Industrial Policy and Promotion (DIPP) last week notified relaxation of FDI norms for ARCs by allowing 100 per cent overseas investment through the automatic route.

Earlier, FDI up to 49 per cent was allowed under the automatic mechanism and beyond that through government approval route.

"It is a welcome move and should help address the issue of stressed assets to some extent in the banking sector as more investments flow into ARCs in the near future," it added.