Budget 2016: Foreign investors can now establish ARCs in India - Feedback

The asset reconstruction companies got a huge leg up from the Union Budget with relaxation in sponsor holding limit, 100 per cent foreign direct investment and a complete pass-through of income tax. Finance Minister Arun Jaitley announced easing of sponsor holding limit to 100 per cent from the current 49 per cent paving the way for foreign investors to set up an ARC in India.

“I propose to make necessary amendments in the Sarfaesi Act to enable the Sponsorer of an ARC to hold upto 100 per cent stake in an ARC and permit non-institutional investors to invest in securitization receipts,” Jaitley said. Currently, no sponsor can hold more than 50 per cent of an ARC’s shareholding either by way of FDI or by routing it through foreign portfolio investor controlled by the single sponsor.


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