Govt issues minimum FDI requirement for unregistered financial services entities
The minimum FDI capital is $20 million for unregistered/exempted entities engaged in 'fund based activities'.
New Delhi: The government on Monday fixed minimum overseas capital requirement for certain class of unregistered and unregulated entities offering financial services under the foreign direct investment regime.
The finance ministry came out with 'minimum capital requirements for other financial services activities which are unregulated by any financial sector regulator and FDI is allowed under government route'.
The minimum FDI capital is $20 million for unregistered/exempted entities engaged in 'fund based activities'. In the case of unregistered entities engaged in 'non-fund based' activities the threshold is $2 million, an official release said.
For the minimum capital requirement, fund-based activities include merchant banking, stock broking, asset management, venture capital, housing finance, credit card business, micro credit, and rural credit.
Non-fund based activities include investment advisory services, financial consultancy, forex broking, money changing business, and credit rating agencies, it said.
According to the release, the requirements would be applicable for fund and non-fund based activities including those not regulated by any financial sector regulator as well as cases "where there is a doubt regarding the regulatory oversight".
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The ban on FDI would eliminate the possibility of indirect flow of overseas funds to the tobacco sector,
Cumulatively, India attracted USD 32.49 billion foreign inflows in April-November period of the current fiscal as against USD 24.81 billion in the same period previous year.
According to the UBS report, foreign direct investment (FDI) inflows to India nearly doubled over the past decade to $42 billion as of 2016-17