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FDI in Asset Reconstruction Companies (ARC) in India

Sectoral Caps - FDI in Asset Reconstruction Companies

Sector/Activity
% of Equity/ FDI Cap
Entry Route
‘Asset Reconstruction Company’ (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
100%
Automatic

Other Conditions

(i) Persons resident outside India can invest in the capital of Asset Reconstruction Companies (ARCs) registered with Reserve Bank of India, up to 100% on the automatic route.

(ii) Investment limit of a sponsor in the shareholding of an ARC will be governed by the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended from time to time. Similarly, investment by institutional / non-institutional investors will also be governed by the said Act, as amended from time to time.
(iii) The total shareholding of an individual FII/FPI shall be below 10% of the total paid-up capital.
(iv) FIIs / FPIs can invest in the Security Receipts (SRs) issued by ARCs registered with Reserve Bank of India. FIIs / FPIs may be allowed up to 100 per cent of each tranche in SRs issued by ARCs, subject to directions / guidelines of Reserve Bank of India.
(v) All investments would be subject to provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended from time to time.


Reference: Clause 5.2.17 of the Consolidated FDI Policy Circular of 2016 (D/o IPP F. No. 5(1)/2016-FC-1 Dated the June 07, 2016) issued by Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India.
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