Reserve Bank of India (RBI) said on Friday new investors who operate from jurisdictions not in compliance with the Financial Action Task Force (FATF) must hold less than 20% of the voting power in non-banking finance companies (NBFCs).

In a bid to stop money laundering, the Reserve Bank of India (RBI) said investors from non-FATF compliant jurisdictions would not be treated on a par with those from other countries or regions.

"Investments in non-banking financial companies (NBFCs) from FATF non-compliant jurisdictions shall not be treated at par with that from the compliant jurisdictions," the Central Bank said.

The move comes days after the RBI had proposed tighter, bank-like regulation of the so-called shadow lending sector to prevent the turmoil caused by the collapse of an infrastructure financing firm in 2018.

The FATF non-compliant jurisdictions' contributions in NBFCs shall not be viewed on a par with those of compliant jurisdictions.  New investors from such jurisdictions as a whole should be smaller than the threshold of 20% of the voting power of the NBFC, the release said.

However, existing investors of NBFCs prior to the declaration of the source or intermediate jurisdictions as non-compliant with the FATF can continue to invest or make additional investments under existing regulations in order to encourage business continuity in India.

RBI projects retail inflation in 5 to 5.2 percent range for H1 FY22

Retail inflation cools to 16-month low of 4.06 pc in January

Govt to work with RBI for execution of bank privatization plan: Finance Minister