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India May Widen NBFC Activities To Invite FDI

The Indian government may consider widening the list of Non-Banking Financial Companies or NBFCs activities that can invite foreign direct investment of FDI, and the Reserve bank of India or RBI supports this move, reports said.

The Department of Industrial Policy and Promotion (DIPP) is preparing the FDI Press Note, which will find new activities and it will be effective for 2012-13. At present, 18 NBFC activities have been permitted for FDI.

"There is a proposal to reorganize the 'leasing and finance' business (one of the 18 specified NBFC activities) for FDI. The reorganization may be into four activities, namely leasing, loans and advances, hire purchases and factoring." a person familiar with the development reportedly said.

Another proposal is about a new 'payment system activity by non-banks.' This may include issue of prepaid payment instruments, mobile wallets or e-wallets, and setting up technology infrastructure for supporting retail payments in areas relating to payment through credit/debit cards and prepaid instruments.

He said that this new activity may be considered for 100 percent FDI under the automatic route. However, there would be a condition that the new activity is in compliance with the Payment and Settlement Systems Act 2007 and conform to a suitable capitalization norm, he added.

Another proposal on the anvil is to allow cent percent FDI for primary dealership in government bond market. This permission can be given under the automatic route, subject to minimum capitalization norms and the RBI guidelines for primary dealer business, he added.

by RTT Staff Writer

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