StanChart plan okayed

The Foreign Investment Promotion Board (FIPB) has cleared a proposal from Standard Chartered Investments and Loans India, a subsidiary of Standard Chartered Bank UK, to acquire a 25 per cent stake in Standard Chartered Asset Management Company (SCAMC).

The company will acquire 652,502 equity shares from Propycon Trading Investments, Trivikram Investments & Trading Company Ltd and Naval Bir Kumar.

After the acquisition, Standard Chartered Bank will own 75 per cent of the shares of SCAMC while Standard Chartered Investments and Loans India (SCILL), its wholly-owned subsidiary, will own 25 per cent.

Standard Chartered Bank has already invested $50 million in SCILL and has fulfiled the minimum capitalisation norms for the non-banking finance companies sector.

As per the Press Note 4 of 2001, a foreign investor can set up 100 per cent operating subsidiaries without disinvesting a minimum 25 per cent of its equity to Indian entities, subject to bringing in $50 million.

The department of economic affairs had recommended SCILL's proposal for acquiring 25 per cent holding in SCAMC, subject to SCILL adhering to the minimum capitalisation norms to the extent of $ 50 million. FIPB has sent the proposal to Finance Minister P Chidambaram for approval. As the investment does not pertain to the automatic route, prior approval of FIPB was required.

SCILL had been granted approval in 1999 to establish a separate asset management company for carrying on the business of fund management, with foreign equity participation of 75 per cent.