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The Government is considering whether to amend foreign direct investment (FDI) policy to allow FDI in the business of trusteeship and estate planning services.
The Finance Ministry would take a policy decision on this issue after getting comments from the Reserve Bank of India (RBI), Department of Financial Services and Department of Economic Affairs.
The trigger for policy review is an application from BNP Paribas India Holding Private Limited (BNPP India) to incorporate a subsidiary to serve as trusteeship services trustee for private trusts and charitable trusts and to provide estate planning services to its customers in the country. 
The company intends to provide these services outside the regulatory purview of RBI and Securities and Exchange Board of India (SEBI). The company’s proposal does not envisage any fresh foreign investment inflow. 
BNP India has categorically stated that it does not intend to serve as a debentures trustee, security trustee and as a trustee for alternative investment funds. These three services come under the regulatory oversight of RBI/SEBI. 
Way back in February 2009, BNPP India had sought clarification from Department of Industrial Policy and Promotion (DIPP) as to whether the Government would allow FDI in trusteeship and estate planning business through the automatic route. 
At that time, the company intended to render trusteeship services for private trusts, charitable trusts, debenture trustees registered with SEBI and trustees for securitization and asset reconstruction trusts that come under RBI’s domain. 
DIPP replied in March 2009 that the mentioned activities did not fall within the list of approved non-banking financial company (NBFC) activities for FDI.    
 According to Section 6 of the Banking Regulation Act, 1949, the banks are allowed to provide trusteeship and estate planning services even though these activities are not part of banking business.  
Certain domestic banks and NBFCs provide these services through their special subsidiaries. A few instances are: IDBI Trusteeship Services Limited, Kotak Mahindra Trusteeship Services Limited and IL&FS Trust Company Limited (ITCL). 
BNPP India is wholly owned by BNP Paribas SA, which is one of the world’s largest universal bank  with headquarters in France.  BNPP India is an investment holding company of BNPP group in India. The company is a core investment company (CIC), which is exempted from registration with RBI under the Core Investment Companies (Reserve Bank) Directions. 
As BNPP India intended to operate as an exempt CIC, it surrendered its NBFC licence to RBI with a request to RBI in March 2013 to deregister it as an NBFC. 
BNP Paribas group has been doing business in India since 1860. It operates through a clutch of subsidiaries and joint ventures in a wide range of areas that include investment banking, private banking, life insurance, mutual funds, infrastructure funding, retail banking and institutional broking.
                  
 
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