In a bid to allow credit bureaus in India for raising funds from their foreign promoters and to allow new entrants into the country, the Reserve Bank of India (RBI) is likely to allow up to 74 percent Foreign Direct Investment (FDI) in credit information companies (CICs) having an established track record of running a credit information bureau in a well-regulated environment and well-diversified ownership.
The RBI in its notification has said that FDI of up to 49 percent will be allowed if the ownership is not well diversified, that means the company having one or more shareholders each holding more than 10 per cent voting rights in the company. Further, the central bank added that if the ownership is not well diversified then at least 50 percent of the directors of the investee CIC in India should be either Indian nationals or NRIs or Persons of Indian Origin, adding that one-third of the directors should be resident Indian nationals. However, the investor company should preferably be a listed company on a recognised stock exchange, it added.
At present, FDI is permitted only up to 49 percent in CICs, but it is limited at 10 percent of their equity capital. Meanwhile, a credit information company collects and maintains records of an individual's payments pertaining to loans and credit cards that are submitted to these companies by banks and other credit institutions, on a monthly basis. Banks use this information in making decisions on granting loans or credit cards to customers.
The RBI in its notification has said that FDI of up to 49 percent will be allowed if the ownership is not well diversified, that means the company having one or more shareholders each holding more than 10 per cent voting rights in the company. Further, the central bank added that if the ownership is not well diversified then at least 50 percent of the directors of the investee CIC in India should be either Indian nationals or NRIs or Persons of Indian Origin, adding that one-third of the directors should be resident Indian nationals. However, the investor company should preferably be a listed company on a recognised stock exchange, it added.
At present, FDI is permitted only up to 49 percent in CICs, but it is limited at 10 percent of their equity capital. Meanwhile, a credit information company collects and maintains records of an individual's payments pertaining to loans and credit cards that are submitted to these companies by banks and other credit institutions, on a monthly basis. Banks use this information in making decisions on granting loans or credit cards to customers.
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