Meet to decide on 100 pc FDI in NBFCs
New Delhi: A decision to allow 100 per cent foreign direct investment (FDI) in the non-banking finance companies (NBFCs) sector is expected to be finalised at a meeting in Mumbai between the officials of the ministry of finance and the Reserve Bank of India (RBI) later this week. The much-awaited decision will have a major bearing on the operation of asset management companies (AMCs) promoted by overseas companies.

The government now permits overseas companies to set up a fully-owned subsidiary in this segment for fund-based activities, if they bring in a minimum capital of $50 million. However, the operating company is under statutory obligations to reduce its equity holding to 74 per cent by offering 26 per cent to local investors within three years of operation.

Recently, GE Capital has submitted a proposal to the government to invest $5 million and hold up to 90 per cent for setting up an AMC in India. However, the Foreign Investment Promotion Board (FIPB) has not cleared the proposal. The issue of allowing 100 per cent FDI in the sector is now before the high-level committee on capital markets headed by the RBI Governor, Dr Bimal Jalan.
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