The Reserve Bank of India is looking at allowing 74 per cent foreign direct investment (FDI) in credit information companies (CIC) in a bid to allow credit bureaus in India to raise funds from their foreign promoters and also to allow new entrants into the country.
In a notification dated November 29,the RBI said,The Reserve Bank may consider allowing higher FDI limits as under to entities which have an established track record of running a credit information bureau in a well regulated environment.
The notification added that FDI of up to 49 per cent will be allowed if the ownership is not well diversified (one or more shareholders own more than 10 per cent voting right in the company),however it said that it can be raised up to 74 per cent if the ownership is well diversified.
Further,the investor company should preferably be a listed company on a recognised stock exchange.
The RBI further said that If the ownership is not well diversified then at least 50 per cent of the directors of the investee CIC in India should be either Indian nationals or NRIs or Persons of Indian Origin. However it said that one-third of the directors should be resident Indian nationals.
Under the current guidelines investments in CICs are limited at 10 per cent of their equity capital but FDI is permitted only up to 49 per cent.
In 2009,RBI had given nod to four credit information companies Credit Information Bureau (India) Ltd,Equifax Credit Information,Experian Credit Information and Highmark collect and maintain credit records of individuals that are submitted to them by banks. Banks use this information in their decisions on granting loans or credit cards.