Investments via the automatic route do not require prior approval from the RBI or the Centre. According to current FDI norms for NBFCs, automatic route FDI is permitted only for 18 NBFC operations, including portfolio management services, merchant banking, stock broking, under writing and financial consultancy.
An official statement said: "...Minimum capitalisation norms as mandated under the FDI policy have been eliminated as most of the regulators already have fixed minimum capitalisation norms. This will induce FDI and spurt economic activities. It will cover the whole [of] India and is not limited to any state/districts." Foreign investment in non-regulated financial services can be made only though the approval route.
This is the Centre's third major change in FDI regulations since November 2015. In June this year, the Centre had opened nine sectors to 100% foreign investment sectors. These include the fields of pharmaceuticals, civil aviation, animal husbandry, e-commerce related to India-manufactured food products and broadcast technology such as DTH, cable and mobile television.
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