Introduction Of Minimum Capitalization Norms For Financial Services – Implications On Existing Structures

We recently conducted a webinar on the 'Introduction of Minimum Capitalization Norms for Financial Services – Implications on Existing Structures'. The webinar focussed on the recent press release by the Ministry of Finance regarding the proposed introduction of minimum capital requirements for foreign direct investment into 'unregulated' financial services activities attached hereto (the "Press Release").

The Press Release is likely to have significant implications particularly on asset managers and investment advisors having foreign investment. The Press Release now imposes dual test of: (i) registration for the entity, and (ii) regulation of the activity undertaken by such entity with a financial services regulator, failing which minimum capitalisation norms of USD 20 million (for fund based activities, such as asset management) and USD 2 million (for non-fund based activities, such as investment advisors rendering exempt advisory services) may trigger.