 "RBI may allow FDI upto 74 % in Credit Information Companies")
Reserve Bank of India today said it may allow higher foreign direct Investment (up to 74%) in Credit Information Companies (CICs) to entities with track record of running a Credit Information Bureau (CIBs) in a well regulated environment.
The direct or indirect investment by any person including resident is capped at 10% of the investee company (CIC). This is necessary and expedient in public interest, RBI said in a communication to CICs.
The regulator has put certain riders to consider proposal for higher FDI in credit information companies.
The regular could consider FDI upto 74% if their ownership is well diversified. And if ownership is not diversified, at least 50% of directors on CICs should be Indian nationals\non-resident Indian\Persons of Indian origin. One third of directors must be resident Indian nationals, RBI said.
The RBI through notification on August 30, had revised limit on FDI plus Foreign Institutional Investrors (FIIs) investment in CICs from 49% to 74%, subject to conditions.
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The FDI could be upto 49% if their ownership is not well diversified. For instance one or more shareholders each hold more than 10% of voting rights in company.
If the investor in a CIC in India is a wholly owned subsidiary of an investment holding company, RBI will apply norms spelt out for higher FDI, to the operating group company. This operating would company would be engaged in credit information business and provides technical know-how to the Credit Information Company in India.
At present four CIBs operate in the country namely, – CIBIL, Equifax, Experian India and High Mark Information Services.
CIBs provides a platform for sustainable growth of the Financial Services Sector, helps in Fraud and Loss Prevention and help to achieve higher accuracy in risk prediction.
It facilitates faster decision making in regard to sanction of credit. A credit bureau collects, processes and stores credit information on the existing borrowers and the potential borrowers to furnish the information, to the member institutions.