Fema Nbfc Article 1

MMJC Advisory Private Limited Regd office:- 1-2 Shilpali CHS,Hanuman Chowk, Near Top Liner,Gokhale Cross Road, Mulund(E), Mumbai 400081 Email id:[email protected] Non-Banking Financial Company- Overview Foreign Investment i The Reserve Bank of India (hereinafter referred to as “RBI”) issues Master Circular on Foreign Investment every year which is valid for one year. The current master circular in force has laid down certain criteria for Foreign Direct Investment (Hereinafter referred to as “FDI”) for all sectors including non-banking finance company (hereinafter referred to as “NBFC”). All the circulars and press notes were consolidated by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry into one policy “Consolidated Policy on FDI” effective from 1 st April 2010. We are trying to overview FDI related compliances required by NBFCs. Types of NBFC which falls under Automatic Route, FDI allowed is 100% with some conditions:- Sr No Type of NBFC 1 Merchant Banking 2 Underwriting 3 Portfolio Management Services 4 Investment Advisory Services 5 Financial Consultancy 6 Stock Broking 7 Asset Management 8 Venture Capital 9 Custodial Services 10 Factoring 11 Credit Rating Agencies 12 Leasing and Finance 13 Housing Finance 14 Forex broking 15 Credit Card Business 16 Micro Credit 17 Rural Credit Conditions:- 1. Minimum capitalization norms for Fund Based NBFC:- • US$ 0.5 million – upfront for FDI upto 51% • US$ 5 million –upfront for FDI upto 75% • US$ 50 million- out of which 7.5 million upfront and balance in 24 months- for FDI beyond 75% and upto 100% 2. Minimum capitalization norms for non-fund based NBFC:- • US$ 0.5 million 3. Foreign Investors can set up 100% operating subsidiaries by bringing US$ 50 million and gain following advantages:- • No requirement of disinvestment a minimum 25% of its equity to Indian entities • No restriction on number of operating subsidiaries • No need to bring additional capital

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Fema Nbfc Article 1