RBI nod for 49 per cent single-entity FDI in credit info companies

The Reserve Bank of India (RBI) has accorded its approval for up to 49 per cent foreign investment in credit information companies by a single entity.

However, it said the entity should not have any single investor with more than 10 per cent voting rights. 

Voting rights are typically limited share holding in a company. Reports suggested that this clause has been put in place to avoid conflict of interest between the foreign investing company and its other businesses. A conflict of interest would typically arise if, for example, the foreign investing entity was a holding company that had other businesses such as banking, which could leverage information from the credit information company for its own business. 

Moreover, the RBI has stipulated that the investor needs to have an established track record of running a credit information bureau in a regulated environment, and needs to be listed on a recognised stock exchange.