Wednesday May 11 2016
News Source: Global Disclosures
Focus: Foreign Investment
Type: General
Country: India
The Ministry of Commerce & Industry has published an amendment to paragraph 6.2.18.1 of “Consolidated FDI Policy Circular of 2015”, effective from 12 May 2015, which concerns foreign investment in asset reconstruction companies (ARC’s) in India.
Prior to the issuance of Press Note 4 (2016), an investment by a foreign investor in an ARC in India was automatically permitted up to 49% of the paid up capital of the ARC, and governmental approval was required for FDI which exceeded 49% of the paid up capital of an ARC.
The amendment to the Circular, published in Press Note 4 2016 and effective from 06 May 2016, now automatically permits up to 100% FDI in ARC’s by foreign investors.
Other amended conditions:
- The removal of a definitive limit of 50% of the shareholding in an ARC (FDI or routing investment through Foreign Institutional Investors / Foreign Portfolio Investors) placed upon single sponsors. This has been replaced with an openly determinable limit as governed by the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended from time to time;
- FII’s / FPI’s are now permitted to invest in the Security Receipts (SR’s) issued by ARC’s registered with the Reserve Bank of India, up to the level of 100% of each tranche (previously 74%), subject to directions / guidelines issued by the Reserve Bank of India.
A shareholding limit of 10% of the total paid up capital by an individual FII / FPI remains effective.
Please click on the following link for the Consolidated FDI Policy Circular of 2015: