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[Enclosure to A. P. (DIR series)
Circular No. 16 dated November 11, 2005]
F. No. 44/17/2004-BO II
Government of India
Ministry of Finance
Department of Economic Affairs
(Banking Division)
Jeevan Deep,
Parliament Street, N Delhi
8th November, 2005
Press Release
FOREIGN DIRECT INVESTMENT (FDI) IN
ASSET RECONSTRUCTION COMPANIES*
Government has decided to permit Foreign Direct Investment (FDI) in the equity
capital of Asset Reconstruction Companies (ARCs). Foreign Investment Promotion
Board (FIPB) would henceforth consider applications from persons/entities eligible
to invest in India in the equity capital of Asset Reconstruction Companies registered
with Reserve Bank of India under the FDI route, subject to the following conditions:
a) Maximum foreign equity shall not exceed 49% of the paid up capital.
b) Where any individual investment exceeds 10% of the equity, ARC should comply
with the provisions of Section 3(3)(f) of SARFAESI Act,**
Foreign Direct Investment alone will be permitted; investments by Foreign Institutional
Investors (FIls) will not be permitted.
2. The policy on FDI in ARCs would be reviewed after two years.
3. Necessary notification/circular under FEMA are being brought out separately
by Reserve Bank of India.
-sd/-
(Amitabh Verma)
Joint Secretary to the Government of India
Copy forwarded to Press Information
Officer, Press information Bureau for giving wide publicity to the above
Press Release.
*Companies registered/to be registered with RBI
as Securitization Companies / Reconstruction Companies under the SARFAESI Act
for the purpose of carrying on/commencing the business of asset reconstruction.
**SARFAESI Act — Securitization and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002.
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