The Government sets foreign capital requirements for unregulated financial services entities

On 16 April 2018, the Ministry of Finance set foreign capital requirements for financial services entities, which are not regulated by any financial regulator. The minimum capital requirements will be USD 20 million for ‘Fund-based activities’ (e.g. Merchant Banking, Under Writing, Portfolio Management Services) and USD 2 million for ‘Non-fund based activities’ (e.g. Investment advisory services, Financial Consultancy, Forex Broking). In 2016, foreign investment of up to 100 per cent was allowed under the government approval route for financial services activities, which are not regulated or partially regulated. This was subject to minimum capitalization requirements, the policy said without specifying the requirements.

• Type:

  • Entry and establishment (Ownership and control)

• Industry:

  • Services (Financial and insurance activities)

• Sources:

  • Bloomberg, Government Sets Foreign Capital Requirements For Unregulated Financial Entities, https://www.bloombergquint.com/markets/2018/04/16/government-sets-foreign-capital-requirements-for-unregulated-financial-entities, 16 Apr 2018
  • PwC, Foreign Investment in "unregulated financial services" entities, https://www.pwc.in/assets/pdfs/news-alert-tax/2018/pwc_news_alert_16_april_2018_foreign_investment_in_unregulated_financial_services_entities.pdf, 16 Apr 2018
  • Grant Thornton India LLP, Government issues minimum capitalisation norms for FDI in unregistered/unregulated financial services entities, http://gtw3.grantthornton.in/assets/T/GrantThorntonRegulatoryAlert_FS.pdf, 16 Apr 2018