India liberalised foreign investment in the Financial Services sector

On 10 August 2016, the Union Cabinet approved the amendment of regulations for foreign investment in Non-Banking Finance Companies (NBFCs). Under the new regulation, FDI is allowed under the automatic route for all “Other Financial Services”, provided that such services are regulated by any regulators (such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) or Pension Fund Regulatory and Development Authority (PFRDA)). The previous regulations on “Non-Banking Finance Companies” stipulated that FDI would be allowed under the automatic route for only 18 specified NBFC activities after fulfilling prescribed minimum capitalisation norms mentioned therein. Further, minimum capitalisation norms as mandated under the FDI policy have been eliminated as most of the regulators have already fixed minimum capitalisation norms.

• Type:

  • Entry and establishment (Approval and admission)

• Industry:

  • Services (Financial and insurance activities)

• Sources:

  • Press Information Bureau, Government of India, Cabinet approves foreign investment in other Financial Services sector, http://pib.nic.in/newsite/pmreleases.aspx?mincode=61, 10 Aug 2016
  • The Indian Express, Cabinet liberalises FDI norms for non-banking financial companies, http://indianexpress.com/article/business/economy/cabinet-liberalises-fdi-norms-for-non-banking-financial-companies-2967004/, 11 Aug 2016
  • Business Standard, Nod to 100% FDI in commodity broking, other financial services, http://www.business-standard.com/article/economy-policy/nod-to-100-fdi-in-commodity-broking-other-financial-services-116081100051_1.html, 11 Aug 2016