After the government restricted the foreign direct investment (FDI) from China without any clarity on the threshold, the Reserve Bank of India (RBI) has now said that it does not want Mauritius based funds to provide foreign direct investment to the Indian non-banking financial companies (NBFCs) sector.
The sector is cash-starved and the private equity and venture capital industry focussed on this space are largely using Mauritius as a choice of jurisdiction.
TV Mohandas Pai, Chairman at Aarin Capital feels the move is illogical, and feels the 'fit and proper' criteria followed by RBI is good enough to decide who should be allowed to invest in NBFCs.
Pai said most FDI in the financial sector is now coming through the automatic route, and the RBI as such has no oversight on the new money coming into the financial sector, and added that the central bank's view on Mauritius-based funds wanting to invest in NBFCs would appear as discriminatory
What does this rule mean for the sector at large? Pai, Renuka Ramnath, Founder & CEO at Multiples Alt Asset Management, Punit Shah, Partner at Dhruva Advisors and Usha Thorat, former Deputy Governor at RBI –discussed this on Big Deal.
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