Foreign Investment in Other Financial Services Sector

In the Notification of Reserve Bank of India, Foreign Exchange Department Notification No.FEMA.375/2016-RB, dated 9 September 2016, there is amendment to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, (Notification No. FEMA 20/2000-RB dated 3rd May 2000), in Schedule 1, in Annex B, Paragraph F.8 relating to Non-Banking Finance Companies (NBFC) in following manner:

1. Financial Services activities regulated by financial sector regulators, viz., RBI, SEBI, IRDA, PFRDA, NHB or any other financial sector regulator as may be notified by the Government of India are allowed under 100% Automatic Route.
2. The other financial services sectors are subject to some conditions, which are laid down by the concerned financial regulators.
3. Any activity which is specifically regulated by an Act, the foreign investment limits will be restricted to those levels/limit that may be specified in that Act, if so mentioned.
4. The financial services which are not regulated by any of the regulators as mentioned above may be allowed up to 100% under government approval route.
5. Downstream investments by any of the entities in Other Financial Services will be subject to extant sectoral regulations and notification as amended from time to time.

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