Don't hike FDI cap on cash management services cos beyond 49%: Industry body
The Central Association of Private Security Industry (CAPSI) pressed forward its case for retaining FDI limit at 49 per cent in cash and ATM management companies to ringfence the domestic industry.
In a representation to Finance Minister Arun Jaitley, CAPSI, the body of cash management service providers, said services rendered using armoured car, cash van and guards fall under the preview of the Private Security Agencies Regulation Act 2005 (PSARA) and hence, raising FDI beyond 49 per cent will be in contravention of law.
The representation comes in the wake of a proposal to raise FDI limit to 100 per cent in cash and ATM management companies as they are deemed as a vital cog in pushing financial inclusion.
There are nearly a dozen cash management companies in the country, including Writer Safeguard, SIS Securitas, CMS, Secure Value, Logicash, Brinks Arya, Securitrans and Scientific Security Management Services.
It also suggested that the cash management logistics company is bound to obtain licence under the PSARA Act before operating such business.
"Further, the Ministry of Home Affairs has clarified that there is no provision under the PSARA for hiring security services and providing it to a third party on sub-contracting basis. Any agency taking such action is circumventing the provisions of the Act," it stated.
The latest consolidated FDI policy, it said, also explains 'private security' and 'armoured car service' will have the same meaning as provided under the PSARA Act 2005 for the FDI purpose.
Cash management companies handle over Rs 40,000 crore of cash per day.
The government in 2015 permitted 100 per cent FDI under the automatic route for white-label ATM operations with an aim to promote financial inclusion.
White-label ATMs are owned and managed by private operators that charge the card-issuing bank a small fee for the transactions.