The Reserve Bank of India has announced a tightening of rules for new investors from overseas in Non-Banking Financial Companies (NBFC).

India’s central bank said it will restrict the influence of investors in NBFCs from countries with “weak measures to combat money laundering and terrorist financing”. New investors from these nations will be limited to owning 20% of the voting power in the NBFC.

The measure will apply to investors from countries on the Financial Action Task Force’s Jurisdictions Under Increased Monitoring list, known as the “grey list”, as well as those on the High-Risk Jurisdictions subject to a Call for Action list (“the black list”).

It said: “New investors from or through non-compliant FATF jurisdictions, whether in existing NBFCs or in companies seeking Certification of Registration (COR), should not be allowed to directly or indirectly acquire ‘significant influence’ in the investee.”

NBFCs, or “shadow banks” provide financial services but are do not hold a banking license. They include investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds, and peer to peer lenders.

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Which nations are non-FATF complaint?

High-risk jurisdictions subject to a call for action (the “black list”)

Iran

North Korea

Jurisdictions under increased monitoring (the “grey list”)

Albania

Barbados

Botswana

Cambodia

Ghana

Jamaica

Mauritius

Myanmar

Nicaragua

Pakistan

Panama

Syria

Uganda

Yemen

Zimbabwe 

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