Sunday, November 4, 2012

Resurrection

Apologies to readers for being 'AWOL' - but I have been a bit busy with work. Just a quick round-up on regulatory developments and interesting trends:

1. Government of India relaxes downstream norms for foreign-owned NBFCs - FDI policy provides that relevant caps and conditionalities shall apply to downstream investments by NBFCs. However, there is a specific exception for 100% foreign-owned NBFCs where there is no restriction on establishing downstream subsidiaries without further capitalizing each subsidiary with the minimum required foreign investment. However, this specific dispensation was not available to NBFCs where foreign investment is between 75% and 100%. By way of a Press Note No. 9 (2012) Series, the Government has now brought such NBFCs on par with 100% foreign-owned NBFCs, whereby they can also set up downstream subsidiaries without further capitalizing each one of them with the requirement minimum amount.

2. International PE outfits buy in to NBFC model - As per a Business Today article, global PE firms are using NBFCs in India to get into the arena of corporate lending. The article analyzes the reasons for this and sets out an interesting continuum of NBFC regulation from February 1964 till date (set out below):



[Source: "A Shaky Ride" by Anand Adhikari, Business Today, Edition: November 11, 2012]

3. RBI notifies revised guidelines for micro-finance NBFCs - Based on representations received from micro-finance institutions, the RBI has made certain amendments to the regulations governing micro-finance NBFCs, a new category introduced by RBI in 2011. 

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