The Centre has allowed 100 per cent foreign direct investment (FDI) in asset reconstruction companies (ARCs) under the automatic route.
- So far, foreign investment was automatic only up to 49 per cent; beyond that government approval was needed.
- FII/FPIs have been permitted to invest up to 100 per cent of each tranche in security receipts issued by ARCs, subject to RBI directions/guidelines.
- Allowing 100 per cent FDI would come as big boost for companies which are struggling for funds, as banks refuse to give steep discounts on stressed assets and the ARCs have to make upfront payment of 15 per cent of the cost of the asset.
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