ANNOUNCEMENT 03 Oct 2012In October 2012, the government of India announced altered domestic business conditions for foreign investors.
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On 3 October 2012, the Department for Industrial Policy and Promotion (DIPP) India issued a notification amending the foreign direct investment policy for foreign owned Non-Bank Financial Companies (NBFCs). The amendment alters the restrictions on the establishment of subsidiaries.
Earlier, the policy provided that 100% foreign owned NBFCs that had met the minimum capitalization requirement of USD 50 million could set up subsidiaries to carry out specific NBFC activities without any restriction on the number and without any requirement to bring any additional capital to capitalize such subsidiaries.
At the same time, NBFCs that were having more than 75% but less than 100% foreign investment were subject to the same capitailization requirements, but were not given the same freedom to establish subsidiaries.
With this amendment, this disparity has been removed and any NBFCs having more than 75% foreign investment is provided the liberal policy accorded to 100% foreign owned NBFCs.