RBI is concerned over new guidelines for calculating indirect foreign investment
The RBI has raised concerns over the new guidelines for the purpose of calculation of indirect foreign investment in an Indian entity which will result in far-reaching changes in the ownership pattern of private banks.
As per the new guidelines, a sum total of FDI, stake from non-resident Indians, American and Global Depository Receipts, Foreign Currency Convertible Bonds and Convertible Preference Shares will be taken into account. With these changes, several private sector banks may find themselves transforming their status from being 'resident entities' to the non-resident entities.
The RBI, as also the Finance Ministry, has raised issues concerning these far-reaching changes which will throw several banks into a different regime of governance in terms of policy clearances.
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