What changed
RBI replaced the general NBFC overseas investment directions with a separate set for CICs, recognizing their unique holding company nature. CICs now need prior RBI approval for financial sector overseas investments, and exempted CICs must register with RBI for such investments. Non-financial sector investments by exempted CICs do not require registration.
What it means for you
CICs investing in financial sector abroad face stricter regulatory oversight, including mandatory registration and compliance with all registered CIC norms. This increases compliance costs and approval timelines for such investments. For non-financial investments, exempted CICs retain flexibility without RBI registration, but registered CICs must report within 30 days.
What you must do
- Review your CIC's overseas investment plans to classify them as financial or non-financial sector.
- If investing in financial sector abroad, ensure your CIC holds a valid Certificate of Registration from RBI.
- For exempted CICs planning financial sector investments, initiate registration process with RBI immediately.
- For registered CICs making non-financial overseas investments, report to your Regional Office of DNBS within 30 days.
- Maintain meticulous compliance with the enclosed Directions and FEMA provisions.
Who it affects
All Core Investment Companies (CICs) registered with RBI, Exempted CICs (those not registered with RBI), CICs planning overseas investments in financial sector, CICs making non-financial overseas investments
Do exempted CICs need RBI registration for non-financial overseas investments?
No, exempted CICs making overseas investments in non-financial sector do not require registration with RBI and these Directions do not apply to them.
What is the reporting requirement for registered CICs making non-financial overseas investments?
Registered CICs need not obtain prior approval from DNBS for non-financial overseas investments but must report to the Regional Office of DNBS where they are registered within 30 days of such investment.
What happens if an exempted CIC wants to invest in financial sector overseas?
It must first obtain a Certificate of Registration from RBI and comply with all regulations applicable to registered CICs, including being regulated like a CIC-ND-SI.