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Foreign Investment in India

Q.29: What is the concept of downstream investment and Indirect Foreign Investment ? +

Answer: Downstream investment is investment made by an Indian entity which has total foreign investment in it or an Investment Vehicle in the capital instruments or the capital, as the case may be, of another Indian entity.If the investor company has total foreign investment in it and is not owned and not controlled by resident Indian citizens or is owned or controlled by persons resident outside India then such investment shall be “Indirect Foreign Investment” for the investee company.

Retail Direct Scheme

Investment and Account holdings related queries

29. What is the minimum amount for investment through Retail Direct platform? +

S. No.	Government security	Minimum investment amount/quantity (as on Nov 12, 2021)
1	Government of India Treasury Bills (T-Bills)	₹10,000
2	Government of India dated securities (dated G-Sec)	₹10,000
3	State Development Loans (SDLs)	₹10,000
4	Sovereign Gold Bonds (SGB)	One gram of gold

External Commercial Borrowings (ECB) and Trade Credits

G. END-USES

29. Can the housing finance companies raise ECB for on-lending to individual borrowers exclusively for flats/units in the affordable housing projects as defined in Harmonised Master List of Infrastructure Sub-sectors notified by Government of India? +

Yes.

Core Investment Companies

Core Investment Companies (CICs)

29. A group would like to set up a CIC-ND-SI in the group to rationalize the set up. However, no company can commence the business of NBFI without COR from RBI. Therefore the proposed company would have to apply for COR before transferring shares from different companies to the CIC-ND-SI. But at that time the company would not be eligible in terms of the requirements, as it would not have 90% of net assets as investment in group companies. What should the company do? +

Ans: The company would have to apply for COR to RBI, giving a business plan within a prescribed time period of one year in which it would achieve CIC-ND-SI status. In case the company is unable to do so, the exemptions would not apply and the company would have to comply with NBFC capital adequacy and exposure norms.

FAQs on Non-Banking Financial Companies

Credit Rating

29. Can an NBFC which is yet to be Rated accept public deposit ? +

No. If any NBFC has not obtained the minimum prescribed Credit Rating, it is not entitled to raise public deposits

Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024

Accounts frozen, lien marked etc.

29. What will happen to my Paytm Payments Bank account/ wallet if there is a lien or freeze marked on account of internal policies of Paytm Payments Bank?

The bank has been directed to allow withdrawal or transfer to another bank account of the customer, upto the available balance in the account / wallets.

Domestic Deposits

III. Advances

30. Whether banks can grant fixed rate loans for the purposes other than project finance? +

The banks have freedom to offer all loans to fixed or floating rates subject to conformity to Asset Liability Management (ALM) Guidelines.

Indian Currency

C. Different Types of Bank Notes and Security Features of banknotes

10. What are the quality control measures adopted in currency note printing?

The processes and systems followed for production of Indian banknotes are at par with the best practices adopted globally. In line with the same, banknote quality is maintained well within the various tolerance parameters for dimension, placement of design, print features etc. A press release in this regard can be accessed at the following link: /en/web/rbi/-/press-releases/rbi-clarifies-on-quality-control-measures-in-currency-note-printing-41364

All you wanted to know about NBFCs

C. Residuary Non-Banking Companies (RNBCs)

30. What is a Residuary Non-Banking Company (RNBC)? In what way it is different from other NBFCs? +

Residuary Non-Banking Company is a class of NBFC which is a company and has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner and not being Investment, Asset Financing, Loan Company. These companies are required to maintain investments as per directions of RBI, in addition to liquid assets. The functioning of these companies is different from those of NBFCs in terms of method of mobilization of deposits and requirement of deployment of depositors' funds as per Directions. Besides, Prudential Norms Directions are applicable to these companies also.

Foreign Investment in India

Q.30: Whether an Indian company (owned or controlled by persons resident outside India or not owned and not controlled by resident Indian citizens (FOCC)) investing in instruments other than capital instruments of another Indian company will be treated as downstream investment ? +

Answer: No