The Hindu Business Line : FIPB defers clearance to ChrysCap's DCB stake plan

THE Foreign Investment Promotion Board (FIPB) has again deferred clearance to Mauritius-based Chrys Capital II LLC's plan to acquire 12.89 per cent stake in Development Credit Bank (DCB) following request from the Foreign Investment Unit (FIU) of the Department of Economic Affairs (DEA).

According to the DEA (FIU), this was necessary because the Central Board of Direct Taxes (CBDT) had not been able to procure the necessary information about the acquirer from the Mauritius Government.

The banking division of the Finance Ministry had earlier asked the CBDT to get information about the acquirer from Mauritius following which the CBDT had informed that under the provision of exchange of information under the Indo-Mauritius Double Taxation Avoidance Agreement, a request can be made to the Mauritius tax authorities only in case there is any taxation matter involved with any Mauritius company and as such, the CBDT cannot request the Mauritius Government for the information asked for by the banking division.

Following this answer, the FIPB took up the matter for consideration around the end of December last year when the DEA (FIU) sought deferment to seek the opinion of the Reserve Bank of India on the proposed foreign direct investment inflow into the bank, particularly, because the DCB already has NRI/OCB equity to the extent of 49 per cent. It may be mentioned that though theoretically 74 per cent FDI is allowed in private banks, the policy has not yet been put to practice.

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