New Delhi, Nov. 15
THE Foreign Investment Promotion Board (FIPB) is awaiting the views of the Reserve Bank of India on the pending proposal of DBS Bank Ltd, Singapore, seeking to acquire stake in Cholamandalam Investment & Finance Company.
The Finance Ministry has stated that since the proposal of DBS Bank, Singapore, is for acquiring 37 per cent stake in a non-banking finance company (NBFC), the comments of the RBI have been sought. The Board has directed the Department of Economic Affairs to write to the RBI to expedite its comments.
Cholamandalam Investment & Finance Company Ltd provides vehicle finance, including heavy commercial vehicle, light commercial vehicle and automobile finance, as well as financing against shares and property finance. It also provides investment advisory, asset management and brokerage services through its subsidiaries.
As per the existing policy, 100 per cent foreign direct investment is allowed in the NBFC sector under automatic route. However, transfer of shares from resident to non-resident of a company engaged in NBFC activities requires FIPB approval and investment is subject to capitalisation norms.
DBS plans to acquire up to 25 per cent of the total paid-up equity share capital of the company from Tube Investments of India Ltd. It is also planning to subscribe on a preferential basis up to 7.33 per cent of the expanded paid-up equity share capital of Cholamandalam. Besides this, DBS will also make an open offer for acquiring up to 20 per cent of the expanded paid-up equity share capital under the open offer.