RBI's stand on FDI from Mauritius to slow down PE inflows in NBFCs

Some $1-1.5 billion annual inflows in NBFC space likely to be impacted with RBI move

The Reserve Bank of Ind­ia’s recent stand that financial firms can­not be set up with foreign direct investment (FDI) from Mau­ritius or other jurisdictions that do not meet benchmarks laid down by the Financial Action Task Force (FATF) is exp­ected to slow private equity (PE) investments in non-banking financial companies (NBFCs).

“PE Investments in the fin­ancial sector will see a slowdown until funds adopt new jurisdictions that offer similar tax benefits as Mau­ritius or until Mauritius meets the FATF standards,” said Aarthi Sivanandh, partner at J Sagar Asso­ci­ates.

RBI regulated fin­ancial entities will ha­ve to contend with bo­th its note restricting Chi­nese