100% FDI through Automatic Route permitted in Asset Reconstruction Companies

The Department of Industrial Policy & Promotion (DIPP) under Union Ministry of Commerce & Industry has allowed 100 per cent foreign direct investment (FDI) in asset reconstruction companies (ARCs) under the automatic route.

Till now, foreign investment was automatic only up to 49 per cent, beyond that government approval was needed. But now its 100 %, However, some conditions have been set, including the stipulation that the total shareholding of individual foreign institutional investors/foreign portfolio investors must be below 10 per cent of the total paid-up capital.

FII/FPIs have also been permitted to invest up to 100 % of each tranche in security receipts issued by ARCs, subject to RBI directions/guidelines. Now as per the DIPP, the investment limit of a sponsor in the shareholding of an ARC will be governed by the provision of the Sarfaesi law, as amended from time to time.

So now let’s discuss some questions related to this post :
1. Recently the DIPP has allowed how much % of FDI in ARCs under automatic route ?
2. Earlier how much % of foreign investment is allowed by automatic route ?
3. Expand the term DIPP, ARCs, FDi and FPI ?

Courtesy : Hindu Business Line


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