StanChart to set up NBFC

 The group, which has substantial interests in the Indian banking sector, will set up the wholly owned subsidiary to undertake non-banking finance activities directly or through subsidiaries.  The activities would include commercial investments, business and management consultancy, leasing and financing, government sources told Business Standard. The company has approached the finance ministry for permission to set up the venture.  Standard Chartered UK will bring in the $50 million in two forms: $25 million each will come in as equity and unsecured convertible debentures.  Sources said the investment would be made within the stipulated period of two years, as per the guidelines for foreign direct investment in the NBFC sector.  The company will issue the debentures with contractual maturity of seven years from the date of issue, at the end of which they will be compulsorily converted into equities. Hence, they will not be redeemed in cash.  The debt being mandatorily convertible into equity shares, the approved investment levels will remain unchanged by the conversion, and the minimum capitalisation norms adhered to.  As per regulations, the $50 million investment has to be upfront.  In its application, the company has said it is setting up this venture to tap the emerging market opportunities in commercial financing, for instance in mid-market segments and channel financing.  It will focus on medium-sized entities embedded in the supply chain of large manufacturing companies, independent service providers and contractors for large infrastructure projects.