The Hindu Business Line : RBI yet to give FEMA nod to new FDI rules

NEW DELHI: Holding back clearance under the Foreign Exchange Management Act (FEMA) to the controversial FDI rules, the RBI has raised concerns over the new guidelines resulting in far-reaching changes in the ownership pattern of private banks.

As per the new guidelines, for the purpose of calculation of indirect foreign investment in an Indian entity, 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, an official said.

As these concerns are yet to be addressed, the RBI has not notified the FDI guidelines amended in February.

“The RBI has yet to notify the new guidelines... but we are hopeful they will notify,” an official in the Department of Industrial Policy and Promotion (DIPP) said. - PTI

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