The Reserve Bank of India has, in supersession of its directive dated November 29, 2013, revised its directions (DBR. CID. BC. No.98/20.16.042/2015-16 dated May 19, 2016), allowing higher Foreign Direct Investment (FDI) limits in Credit Information Companies (CICs) to entities which have an established track record of running a Credit Information Bureau in a well regulated environment, as under:
a. up to 49 per cent if ownership of the investor company is not well diversified;
b. up to 100 per cent if ownership of investor company is well diversified, or if not well diversified, subject to conditions relating to composition of the Board of Directors of the investee CIC. Investment of Foreign Institutional Investors (FII)/Foreign Portfolio Investors (FPI) should directly or indirectly hold below 10 per cent equity.
At present, investments, directly or indirectly by any person, whether resident or otherwise are limited to 10 per cent of the equity capital of a Credit Information Company (CIC). However, investments under FDI were permitted up to 74 per cent subject to the conditions stipulated in the Reserve Bank’s directive (DBOD.CID.BC.No.74/20.16.042/2013-14 and its Press Release No.1100 dated November 29, 2013). The Reserve Bank of India, (Notification No. FEMA 362/2016-RB dated February 15, 2016) revised the foreign investment limits in CICs from 74per cent to 100 per cent under automatic route, subject to certain conditions.
RBI/2015-16/400
DBR.CID.BC.No.98/20.16.042/2015-16
Dated: May 19, 2016
All Credit Information Companies
Investment in Credit Information Companies
In exercise of the powers conferred by sub-section (1) of Section 11 of Credit Information Companies (Regulation) Act, 2005, and in supersession of its direction on Investment in Credit Information Companies (CICs) dated November 29, 2013, Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest to do so, hereby directs that investments directly or indirectly by any person, whether resident or otherwise, in a CIC, shall not exceed ten percent of the equity capital of the investee company.
2. Notwithstanding the above, the Reserve Bank may consider allowing higher FDI limits as under to entities which have an established track record of running a Credit Information Bureau in a well regulated environment:
a. up to 49% if their ownership is not well diversified (i.e., one or more shareholders each hold more than 10% of voting rights in the company)
b. up to 100% if their ownership is well diversified or If their ownership is not well diversified, at least 50% of the directors of the investee CIC in India are Indian nationals/ Non-Resident Indians/ Persons of Indian Origin subject to the condition that one third of the directors are Indian nationals resident in India.
c. The investor company should preferably be a listed company on a recognised stock exchange.
3. FII/FPI investment would be permitted subject to the conditions that:
a. A single entity should directly or indirectly hold below 10% equity;
b. Any acquisition in excess of 1% will have to be reported to RBI as a mandatory requirement;
c. FIIs/FPIs investing in CICs shall not seek a representation on the Board of Directors based upon their shareholding.
4. In case the investor in a Credit Information Company in India is a wholly owned subsidiary (directly or indirectly) of an investment holding company, the conditions as at (2) and (3) above will be applied to the operating group company that is engaged in credit information business and has undertaken to provide technical know-how to the Credit Information Company in India.
(N.S. Vishwanathan)
Executive Director