FDI allowed up to 100 % in While Label ATM Operations
The extant FDI Policy of 2015 has been revised by the Department of Industrial Policy & Promotion, Government of India vide Press Note 11 issued on 1st October, 2015. In terms of the said Press Note, foreign investment is now permitted in While Label ATM Operations up to 100% under automatic route, subject to certain conditions.
The concept of While Label ATMs was introduced by the Reserve Bank in the year 2012 when it came out with the guidelines for White Label ATMs in India on 20th June, 2012 vide Circular DPSS.CO.PD. No. 2298/02.10.002/2011-2012. White Label ATMs are set up by private non-bank companies that own and operate their own brand of ATMs. They provide banking services to the customers of banks in India, based on the cards (debit/credit/prepaid) issued by banks. Prior to issuance of such guidelines in the year 2012, only banks were permitted by the Reserve Bank to set up ATMs.
Prior to Press Note 11
In terms of Para 220.127.116.11 of the FDI Policy, foreign investment in NBFC is allowed under the automatic route in certain prescribed activities only, subject to minimum capitalization norms and compliance with the guidelines of the relevant regulator(s), as applicable. In such prescribed activities, the White Label ATM Operations were not included.
Post Press Note 11
The Government has now permitted the NBFCs carrying on White Label ATM Operations to accept foreign investment up to the limit of 100% under automatic route by inserting Para 18.104.22.168.3 in the extant FDI Policy. It is to be noted that the conditions as applicable in case of other activities carried on by NBFCs in India, wherein 100% foreign investment is permitted, w.r.t. minimum capitalization norms, shall not apply in case of White Label Operations.
Consequently, NBFCs carrying on the White Label ATM Operations may now attract foreign investment up to 100% under automatic route, subject to the following three conditions:
- Minimum net worth
A non-banking entity intending to set up White Label ATMs shall have a minimum net worth of INR 100 crore as per the audited balance sheet for the last financial year. Further, the minimum net worth shall be maintained by the non-banking entities at all times;
- Compliance with other conditions
If the non-banking entity is also engaged in any other NBFC activities, wherein 100% FDI is permitted under automatic route, then foreign investment in the company setting up White Label ATM shall also comply with minimum capitalization norms as provided under Para 22.214.171.124 of the extant FDI Policy;
- Compliance with RBI guidelines
Foreign investment in White Label ATMs will be subject to specific criteria and guidelines issued by the Reserve Bank vide Circular No. DPSS.CO.PD. No. 2298/02.10.002/2011-2012, as amended from time to time.