Liberalization of Foreign Direct Investment – Other Financial Services

Department of Industrial Policy & Promotion in order to provide easy finance to the Indian Industries has liberalized the Foreign Direct Investment (‘FDI’) limits in Non-Banking Financial Company. Para 5.2.26 of the Consolidated FDI Policy has been replaced with the following para subject to specified conditions in chartered accountant firms in mumbai:
Before Circular:
Foreign investment in NBFC is allowed under the automatic route in only the following activities:
i.        Merchant Banking
ii.        Under Writing
iii.       Portfolio Management Services
iv.        Investment Advisory Services
v.        Financial Consultancy
vi.        Stock Broking
vii.        Asset Management
viii.       Venture Capital
ix.        Custodian Services
x.        Factoring
xi.        Credit Rating Agencies
xii.        Leasing & Finance
xiii.       Housing Finance
xiv.        Forex Broking
xv.        Credit Card Business
xvi.        Money Changing Business
xvii.        Micro Credit
xviii.       Rural Credit
After Circular:
Other Financial Services: Financial Services activities regulated by Financial Sector regulators viz. Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority direct foreign investment in India, The Pension Fund Regulatory and Development Authority, National Horticulture Board or any other financial sector regulator as may be notified by Government of India subject to certain conditions.
% of Equity / FDI Cap : 100%
Entry Route: Automatic
Further, minimum capitalization norms for Foreign Direct Investment in Non-Banking Finance Companies have been done away with. Investment in “Other Financial Services” activities shall be now subject to conditionalities, including minimum capitalization norms, as specified by the concerned Regulator or Government Agency.