The banking and monetary regulator, Reserve Bank of India (RBI), has relaxed norms for overseas non banking financial institutions (NBFC) to set up subsidiaries in India. According to the new norms, foreign NBFCs are now allowed to open subsidiaries in the country despite having a foreign investment of less than 100 percent.
The apex bank issued a notification which said, "NBFCs having foreign investment more than 75 per cent and up to 100 per cent and with a minimum capitalization of $ 50 million can set up step down subsidiaries for specific NBFC activities."
Earlier, 100 percent foreign owned branches of NBFCs with a minimum capitalization of about $ 50 million only were permitted to set up subsidiaries in the country.
Government had taken this decision last week itself, following which RBI issued the notification which further added that the step down or overseas arms will be allowed to be set up with no limitations on their number and with no requirement of investing additional capital.