The Reserve Bank of India on Thursday said all core investment companies (CICs) wanting to invest overseas in the financial sector will have to take its prior approval.
CICs desirous of making overseas investment in the financial sector will need to have a Certificate of Registration (CoR) from RBI and comply with all the regulations applicable to registered CICs, the central bank said in a statement.
CICs invest primarily in group companies, in different sectors of the economy. Being holding companies they invest in both financial and non-financial activities.
RBI said it has issued the new guidelines since it is necessary in public interest and for the purpose of enabling it to regulate the credit system to the advantage of the country.
These directions will be applicable to all CICs (whether registered with RBI or exempted from registration) that intend to invest overseas in the financial sector.
The RBI said that the total overseas investment by CICs in the financial sector should not exceed 200 per cent of their owned funds.
As CICs are non-operating entities, they will not, in the normal course, be allowed to open branches overseas, RBI said.