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    Is FDI allowed in NBFC sector?

    Posted By : Kamal / Published on : 15-Feb-2022 01:33 PM / View : 822 / Comment : 1

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    Hello,

    Will the FEMA Provisions get violated if the Company is registered as NBFC? pl guide
    Read more on : sector nbfc allowed

    • Yes, Foreign Direct Investment (FDI) is allowed in the Non-Banking Financial Company (NBFC) sector subject to certain conditions and restrictions. The regulatory framework for FDI in NBFCs is governed by the Foreign Exchange Management Act (FEMA), 1999, and the regulations made thereunder.

      As per the current FDI policy, 100% FDI is permitted under the automatic route in certain types of NBFCs, such as those engaged in the activities of asset finance, credit card business, infrastructure finance companies, and microfinance activities. However, for other types of NBFCs, such as those engaged in the activities of investment and credit, approval from the Reserve Bank of India (RBI) is required for FDI.

      The RBI has also prescribed certain minimum capitalization norms for NBFCs with foreign investment, depending on the type of activity and the nature of the investment. Additionally, NBFCs with foreign investment are required to comply with the various prudential and regulatory guidelines issued by the RBI from time to time.

      In summary, FDI is allowed in the NBFC sector, subject to certain conditions and restrictions. The type of NBFC, the activities undertaken by the NBFC, and the amount of foreign investment are important factors in determining the regulatory requirements for FDI.

      28-03-2023 / 12:11:36 PM
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