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CAMS to Invest INR 8 Crore in CAMS FIS to Meet Regulatory Requirements
Team Finance Saathi
28/Dec/2024
What's covered under the Article:
- CAMS approves INR 8 Crore investment in CAMS FIS through rights issue.
- Investment will be made in tranches, with the first tranche of INR 4 Crore by December 31, 2024.
- CAMS FIS’s turnover, business model, and regulatory compliance explained.
On December 28, 2024, Computer Age Management Services Limited (CAMS), a leading financial services provider in India, disclosed plans to make an additional investment of INR 8 Crore in its wholly owned subsidiary, CAMS Financial Information Services Private Limited (CAMS FIS). The decision, which was approved by the Board of Directors during their meeting today, involves subscribing to equity shares through a rights issue by CAMS FIS. This investment will be executed in one or more tranches, with the first tranche of INR 4 Crore scheduled to be completed by December 31, 2024.
Key Details of the Transaction:
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Nature of Investment: The investment will be made in the form of a cash consideration, and the shares will be acquired at their face value.
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Purpose: The investment is primarily intended to help CAMS FIS meet the minimum net worth required under the Aggregator Regulation of the NBFC sector. Specifically, the regulation mandates maintaining a minimum net worth of INR 2 Crore at all times. By infusing further capital, CAMS will ensure that CAMS FIS remains compliant with this regulatory requirement.
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Related Party Transaction: Since CAMS FIS is a wholly owned subsidiary of CAMS, the transaction falls within the category of related party transactions. However, the company confirms that the transaction is conducted at arm's length, ensuring transparency and fairness.
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Company’s Control: With the investment, CAMS will continue to hold 100% shareholding in CAMS FIS, maintaining full control over the subsidiary's operations and business activities.
CAMS FIS: Overview of the Entity
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Incorporation and Business: CAMS FIS is a Wholly Owned Subsidiary incorporated in India, providing services in the financial data aggregation domain. The company offers a platform that enables consenting customers’ financial asset data to be shared from a set of Financial Information Providers (FIPs) to Financial Information Users (FIUs).
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Turnover History: Over the last three years, CAMS FIS has demonstrated growth in turnover:
- FY 2023-24: INR 68.01 Lakhs
- FY 2022-23: INR 2.66 Lakhs
- FY 2021-22: INR 0.25 Lakhs
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Industry: CAMS FIS operates in the NBFCs sector, specifically as an account aggregator, which plays a crucial role in financial data sharing and aggregation, adhering to the regulatory standards set for NBFCs.
Transaction Timeline and Future Plans
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The first tranche of INR 4 Crore is expected to be completed by December 31, 2024. Additional investments will be made in subsequent tranches, with separate filings to be made as those investments are executed.
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The total investment of INR 8 Crore is a strategic move to ensure that CAMS FIS has sufficient capital to operate within the regulatory framework and maintain its growth trajectory.
Regulatory Compliance and Approval
The company emphasized that no governmental or regulatory approvals are required for this investment, as the transaction is entirely within the purview of related party dealings. CAMS has already disclosed this information on their official website at www.camsonline.com.
The investment represents a proactive effort by CAMS to strengthen its subsidiary’s regulatory standing while aligning with the Aggregator regulations governing NBFCs.
Conclusion
This disclosure underscores CAMS’s commitment to its regulatory obligations and its long-term vision for CAMS FIS. By ensuring that its subsidiary meets the necessary capital requirements, CAMS is enhancing its position in the financial services industry and reinforcing its corporate governance practices.