India: RBI Liberalises the Rules for Foreign Direct Investment to Attract Foreign Investors

NEW DELHI (NNN-PTI): Encouraging international investors by easing FDI norms, the Reserve Bank of India today said that transfer of shares between Indians and non-residents will not need its consent in a number of important areas like financial services.

Amending the Foreign Exchange Management Regulations, the RBI said that its prior consent would not be required where the company whose shares are being transferred is engaged in any financial service.

The liberalisation would help the whole financial services sector, including the non-banking finance companies.

Besides, the RBI consent has also been done away with for transfer of shares between residents and non-residents in cases where the Foreign Investment Approval Board (FIPB) has already granted its permissions and the SEBI guidelines have been adhered to.

These steps have been taken "as a measure to further liberalise and rationalise the procedures and policies governing foreign direct investment in India," the RBI said.

However, it was made clear that the transactions will have to comply with the SEBI regulations, FDI sectoral caps, and the pricing guidelines as specified by RBI.

Although FDI inflows during April-August have gone up by 95 per cent to USD 17.37 billion, the government and the Reserve Bank are keen to maintain robust foreign exchange reserves in the wake of volatility in the stock market leading to outflows by institutional investors.

The country has foreign exchange reserves of USD 318 billion but the pressure on rupee is matter of concern for an economy which depends on large commodity imports.

Overseas investments by Indian companies in September was USD 3.46 billion. -NNN-PTI