What changed
RBI amended the FDI scheme to permit foreign investment in Credit Information Companies, capping aggregate foreign investment at 49%. Within this, SEBI-registered FIIs can invest up to 24% only through secondary market purchases, and no single FII can hold more than 10% equity. All investments require prior FIPB approval and RBI regulatory clearance.
What it means for you
For banks and lenders, this allows foreign capital to flow into credit information companies, potentially improving data infrastructure and credit scoring models. The caps ensure domestic control remains with Indian entities, while FII participation is limited to secondary market trades. Banks dealing with these companies must ensure compliance with the 49% aggregate limit and individual FII caps.
What you must do
- Update internal compliance systems to monitor aggregate foreign investment in Credit Information Companies against the 49% cap.
- Ensure any FII investment in these companies is routed only through secondary market purchases and does not exceed 24% aggregate or 10% per FII.
- Advise clients and constituents about the new FIPB approval and RBI clearance requirements for foreign investments in Credit Information Companies.
- Review existing exposures to Credit Information Companies to ensure no breach of the new limits.
Who it affects
Category-I Authorised Dealer Banks, Credit Information Companies, Foreign Institutional Investors (FIIs), Foreign investors seeking to invest in Indian credit bureaus
What is the maximum foreign investment allowed in a Credit Information Company?
The aggregate foreign investment is capped at 49% of the equity, with prior FIPB approval and RBI regulatory clearance required.
Can FIIs invest in Credit Information Companies through primary market purchases?
No, FII investment is permitted only through secondary market purchases, and it is limited to 24% of the equity within the overall 49% foreign investment cap.
Is there a limit on individual FII holdings in a Credit Information Company?
Yes, no single FII can hold directly or indirectly more than 10% of the equity of a Credit Information Company.