The FIPB has, however, attached a rider that GE Capital divest 15 per cent stake in the company to domestic shareholders within three years.

SRF Finance is also being re-christened as GE Capital Transportation Financial Services Ltd (GECTFSL).

GE Capital wants to "temporarily" hike its stake to 100 per cent to organise and restructure SRF Finance, mitigate its losses and bring in expertise in areas relating to new products and services, management and technology support, risk-management and training employees.

The SRF board has approved the sell-out to GE Capital, and the open offer will be subject to provisions of the SEBI Takeover Regulations. The proposed company has been asked to confine its operations to the existing approved activities. GE Capital holds the 85 per cent stake throughFMO Netherlands, IFC Washington of the US, and GE Capital (Mauritius) Investment Co.

FIPB had cleared the acquisition subject to certain conditions. These required GE Capital to undertake only 14 permitted NBFC activities. It was stipulated that the balance holding shall be domestic Indian equity. SRF Finance was also told to capitalise up to $25.9 million upfront.

Another rider attached to the permission stipulates that GE Capital capitalise SRF Finance up to $50 million over the next 24 months, either directly or through a SPV subsidiary. FIPB approval has to be sought for any investment by the "special-purpose vehicle" subsidiary.

According to government guidelines, the minimum capitalisation required for a 100 per cent foreign-owned NBFC is $50 million, of which $7.5 million has to be brought upfront and the balance in 24 months. The wholly-owned NBFC can act as a holding company and specific activities can be undertaken by step-down subsidiary with minimum 25 per cent domestic equity. In thesubsidiary floated by the holding company, 10 per cent domestic equity is to be brought upfront and the balance over 24 months.