INDIA: RBI aligns Rules for Investment in Credit Information Companies (CIC`s)

Monday May 23 2016

The Reserve Bank of India has, in supersession of its directive dated 29 November, 2013, revised its directions (DBR. CID. BC No.98/20.042/2015-16 dated 19 May, 2016), allowing higher Foreign Direct Investment (FDI) limits in Credit Information Companies (CIC’s) to entities which have an established track record of running a Credit Information Bureau in a well regulated environment.

The revised Directions provide for limits of:

• Up to 49 per cent if ownership of the investor company is not well diversified;
• Up to 100 per cent, if ownership of the investor company is well diversified, or where it is not well diversified, subject to conditions relating to composition of the Board of Directors of the investee CIC.
• Investment by Foreign Institutional Investors (FII) or Foreign Portfolio Investors (FPI’s) should directly or indirectly hold less than 10 per cent equity.

Currently, investments made directly or indirectly by any person, whether they are resident in India or otherwise, are limited to 10 per cent of the equity capital of a CIC. However, investments under FDI were permitted up to 74 per cent subject to the conditions stipulated in the Reserve Bank’s directive. The Reserve Bank of India revised the foreign investment limits in CIC’s from 74 per cent to 100 per cent, subject to certain conditions.

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