Prudential Norms Set For Finance Firms Overseas Units

The apex bank has further specified that the minimum net worth of the finance company should stand at Rs 15 crore.

These finance companies should have a "good track record of a minimum period of three years", the RBI said in a press release issued yesterday.

These finance companies will also have to be registered with the the Securities and Exchange Board of India (SEBI) as category I merchant bankers, or as NBFCs with the RBI.

The RBI has also made it clear that Indian financial institutions that apply for overseas investments would also have to meet these additional requirements.

 

These measures by the RBI follow the November 7 decision by the Union government to liberalise the existing guidelines for overseas investment. The latest relaxations include:

extending the fast track route to Indian corporates that have foreign exchange earnings other than export earnings;

taking into account the export performance/foreign exchange earnings of the parent or subsidiary company applicants which do not have the requisite export/foreign exchange earning track record for fast-track clearance; and

computation of the period of five years for pay back of investments by way of dividend fees with effect from the date of remmittance of equity rather than from the date of approval of the investment.