FDI in Financial Sector: NoC Waived for Share Transfers
Current · Source: Reserve Bank of India · RBI/2013-14/366 · issued 11 Nov 2013 · ~2 min read
Quick answerRBI has waived the requirement to file No Objection Certificates (NoCs) from financial sector regulators along with form FC-TRS for share transfers in financial services companies. However, any 'fit and proper' or due diligence conditions set by the sector regulator still apply.
The rule, in the simplest words
Banks no longer need to collect NoCs (special permission letters) from financial watchdogs when shares are sold to a foreign buyer.
The foreign buyer must still pass the 'fit and proper' check (background test) required by the sector's regulator.
All other rules for selling shares to foreigners stay the same.
How it plays out — a real example
A forex & trade-finance officer in Indore is processing a share transfer from an Indian owner to a foreign investor in a finance company. She used to ask for NoCs from RBI, SEBI, and IRDAI, but now she skips that step. She still checks that the foreign buyer meets the 'fit and proper' rules set by the sector regulator before approving the deal.
What changed
Earlier, for transfer of shares from residents to non-residents in a financial services company, AD banks required NoCs from the respective financial sector regulators of the investee company, transferor, and transferee to be filed with form FC-TRS. Now, RBI has removed this NoC filing requirement under FEMA, effective from the date of the circular. The underlying 'fit and proper' or due diligence checks mandated by the sector regulator remain in force.
What it means for you
This simplifies the documentation process for FDI-related share transfers in financial sector entities, reducing compliance burden for banks and their customers. Banks no longer need to collect and verify NoCs from multiple regulators for FEMA purposes, but must still ensure that the non-resident investor meets the sector regulator's eligibility criteria. The change does not affect other regulatory approvals required under separate laws.
What you must do
Update internal checklists and FC-TRS processing guidelines to remove the requirement for NoC filing from financial sector regulators.
Continue to verify that the non-resident investor satisfies any 'fit and proper' or due diligence conditions stipulated by the respective financial sector regulator.
Inform your customers and constituents about this waiver through appropriate channels.
Ensure that all other existing instructions on share transfers under FEMA remain unchanged and are complied with.
Who it affects
Category-I Authorised Dealer Banks, Resident sellers of shares in financial services companies, Non-resident buyers of shares in financial services companies, Financial sector regulators (e.g., RBI, SEBI, IRDAI, PFRDA)
❓ Common questions
Do we still need to obtain NoCs from financial sector regulators for FDI share transfers?
No, the requirement to obtain and file NoCs with form FC-TRS has been waived under FEMA. However, any 'fit and proper' or due diligence requirements imposed by the respective financial sector regulator must still be complied with.
Does this circular affect other regulatory approvals needed for the share transfer?
No, this waiver is only from the FEMA perspective. All other permissions or approvals required under any other law remain unchanged and must be obtained as before.
Which entities are covered by this waiver?
The waiver applies to transfers of shares from residents to non-residents where the investee company is in the financial services sector. It covers the investee company, transferor, and transferee entities.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/366
A. P. (DIR Series) Circular No.72
November 11, 2013
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Foreign Direct Investment in Financial Sector – Transfer of Shares
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to Regulation 10(A)(v) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000 , as amended from time to time and Para 2(B)(iv) of A.P.(DIR Series) Circular No.43 dated November 4, 2011 , in terms which for transfer of shares from Residents to Non-Residents where the investee company is in the financial services sector, No Objection Certificate (NoC) is required to be obtained from the respective financial sector regulator/regulators of the investee company as well as transferor and transferee entities and such NoC(s) are to be filed with the form FC-TRS to the AD bank.
2. On a review, it has now been decided that the requirement of NoC(s) will be waived from the perspective of Foreign Exchange Management Act, 1999 and no such NoC(s) need to be filed along with form FC-TRS. However, any 'fit and proper/ due diligence' requirement as regards the non-resident investor as stipulated by the respective financial sector regulator shall have to be complied with.
3. All the other instructions contained in the above referred A.P.(DIR Series) Circular shall remain unchanged.
4. AD Category – I banks may bring the contents of the circular to the notice of their customers/constituents concerned.
5. Reserve Bank of India has since amended the relevant Regulations and notified vide Notification No.FEMA.290/2013-RB dated October 4, 2013 , notified vide. G.S.R.No.682(E) dated October 11, 2013.
6. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/366 · issued 11 Nov 2013. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (Category-I Authorised Dealer Banks, Resident sellers of shares in financial services companies, Non-resident buyers of shares in financial services companies, Financial sector regulators (e.g., RBI, SEBI, IRDAI, PFRDA)), your first concrete step on “FDI in Financial Sector: NoC Waived for Share Transfers” is: “Update internal checklists and FC-TRS processing guidelines to remove the requirement for NoC filing from financial sector regulators.” (RBI issued this 11 Nov 2013).
Circular: RBI/2013-14/366 -- FDI in Financial Sector: NoC Waived for Share Transfers
Issued: 11 Nov 2013
Action required: Update internal checklists and FC-TRS processing guidelines to remove the requirement for NoC filing from financial sector regulators.
Action required: Continue to verify that the non-resident investor satisfies any 'fit and proper' or due diligence conditions stipulated by the respective financial sector regulator.
Action required: Inform your customers and constituents about this waiver through appropriate channels.
Action required: Ensure that all other existing instructions on share transfers under FEMA remain unchanged and are complied with.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8561&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.