Pledge of shares for business purposes in favour of NBFCs - আরবিআই - Reserve Bank of India
Pledge of shares for business purposes in favour of NBFCs
RBI/2013-14/633 June 6, 2014 To All Category – I Authorised Dealer Banks Madam/ Sir, Pledge of shares for business purposes in favour of NBFCs Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the provisions of Para. 2 (i) of A. P. (DIR Series) Circular No. 57 dated May 2, 2011, in terms of which shares of an Indian company held by the non-resident investor can be pledged in favour of a bank in India to secure the credit facilities being extended to the resident investee company for bonafide business purposes subject to the conditions stipulated therein. 2. With a view to further rationalising the process and reducing the transaction time, it has been decided to delegate to the AD Category – I banks the powers to allow pledge of equity shares of an Indian company held by non-resident investor/s in accordance with the FDI policy, in favour of the Non - Banking Financial Companies (NBFCs) – whether listed or not, to secure the credit facilities extended to the resident investee company for bona-fide business purposes / operations, subject to compliance with the conditions indicated below:
3. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Sixth Amendment) Regulations, 2014 notified vide Notification No. FEMA. 305/2014-RB dated May 22, 2014, c.f. G.S.R. No.370(E) dated May 30, 2014. 4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned. 5.. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully (B.P. Kanungo) |