FDI in cash management services gets green light
It also includes ATM cash replenishment services and valuable management. So far these services for banks both private and public have been managed by Indian security companies. After being wary of allowing FDI into these services for few years, the government and RBI have decided to allow foreign firms to join in and bring in their world-class expertise in cash management.
The foreign companies would, however, be restricted from increasing their stake in the Indian joint venture company beyond 49% due to security concerns. Moreover, the foreign investment proposals of such companies engaged in cash management services would be thoroughly vetted by the home ministry before getting the clearance from the Foreign Investment Promotion Board (FIPB).
Last week, the FIPB cleared a proposal of Prosegur, the world's second-largest private security company by market capitalisation, to form a 49:51 joint venture with the country's leading security and intelligence services provider SIS to offer cash management solutions primarily to Indian banks, financial institutions and organised retail firms.
The Spanish company will invest around rs 98 crore for 49% stake in the JV, said a person familiar with the development. As part of the transaction, SIS will demerge its existing cash management services business in the country into the JV firm. Later, the two companies plan to invest up to R600
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