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RBI: Foreign Investment in NBFCs Requires Strict 'Fit and Proper'
19 Dec
Summary
- RBI maintains strict 'fit and proper' assessments for foreign investors.
- Regulatory stance on NBFCs and banks remains unchanged, says ex-RBI Deputy Governor.
- Renewed foreign interest reflects India's market attractiveness, with safeguards paramount.
The Reserve Bank of India (RBI) continues to uphold its strict 'fit and proper' assessment criteria for foreign entities looking to acquire stakes in non-banking financial companies (NBFCs) and banks. R Gandhi, a former Deputy Governor of the RBI, clarified that recent foreign investment activity does not signify a relaxation of regulatory oversight.
Gandhi explained that while policy has always permitted foreign ownership under specific conditions, foreign institutions are now demonstrating greater seriousness by submitting concrete applications. The RBI's due-diligence process remains thorough, with no compromise on standards or checks for ownership proposals.
This increased foreign interest highlights India's growing appeal as a financial market. However, Gandhi stressed that regulatory safeguards, particularly the 'fit and proper' assessment, remain the cornerstone for approving stake acquisitions in financial institutions.
