As per the notification issued by the Reserve Bank Of India (RBI), transfer of shares between residents and non residents would not be require any prior approval in several key areas like financial services.
In simple words, RBI have initiated a relaxation for the global investor by liberalizing the FDI norms. According to the amendment, now prior permission criteria from RBI for the transfer of shares between residents and non residents will not be required in case where the Indian company whose shares are being transferred is engaged in rendering any financial service (**conditions applied).
This will help the financial service sector including the non banking finance companies.
** Conditions include
- The original and resultant investment are in line with the extant FDI policy and FEMA regulations in terms of sectoral caps, conditionalities (such as minimum capitalization), reporting requirements and documentation, etc.
- The pricing for the transaction is compliant with the specific/explicit, extant and relevant SEBI regulations / guidelines (such as IPO, Book building, block deals, delisting, exit, open offer/ substantial acquisition / SEBI SAST, buy back); and
- Chartered Accountants Certificate to the effect that compliance with the relevant SEBI regulations / guidelines as indicated above is attached to the form FC-TRS to be filed with the AD bank.
Official RBI Circular On Foreign Direct Investment – Transfer of Shares