Seeking to woo global investors by easing foreign direct investment (FDI) procedures, the Reserve Bank of India (RBI) on Friday announced that transfer of shares between Indians and non-resident Indians (NRIs) would not require its permission in several key areas such as financial services.
Amending the Foreign Exchange Management Regulations, the RBI said its prior permission would not be necessary where the company whose shares were being transferred was engaged in any financial service. The RBI permission had also been done away with for transfer of shares between residents and non-residents in cases where the Foreign Investment Promotion Board (FIPB) had already given its clearances and the SEBI guidelines were met. The steps had 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 made clear that the transactions would have to comply with the SEBI regulations, FDI sectoral caps, and the pricing guidelines as specified by the RBI. While FDI inflows have gone up by 95 per cent to $17.37 billion between April and August, the government and the RBI want to maintain robust foreign exchange reserves as volatility in the stock market has led to outflows.
“This is a welcome move and will specially help financial services firms and NBFCs which receive comparatively less FDI,” Deloitte, Haskins & Sells Director Anis Chakravarty said.