Mumbai, June 7 (KNN) The Reserve Bank of India (RBI) has said that the shares of an Indian company held by the non-resident investor can be pledged in favour of Non-Banking Financial Companies, whether listed or not, in accordance with the FDI policy.
 
“With a view to further rationalising the process and reducing the transaction time, it has been decided to delegate to the AD Category – I banks the powers to allow pledge of equity shares of an Indian company held by non-resident investor/s in accordance with the FDI policy, in favour of the Non - Banking Financial Companies (NBFCs) – whether listed or not, to secure the credit facilities extended to the resident investee company for bona-fide business purposes / operations,…” RBI has said in a notification.
 
Equity shares listed on a stock exchange(s) only can be pledged in favour of the NBFCs, it added. 


Earlier, these pledges were allowed only in favour of a bank in India, to secure the credit facilities extended to the resident investee company for bona-fide business purposes / operations.


RBI said that only the equity shares listed on a recognised stock exchange/s in India can be pledged in favour of the NBFCs. Further, it said that under no circumstances, the credit concentration norms should be breached by the NBFC.


If there is a breach on invocation of pledge, the shares should be sold and the breach shall be rectified within a period of 30 days from the date of invocation of pledge. (KNN Bureau)