MUMBAI, May 24 -- Private equity (PE) and venture capital (VC) funds have written to the Reserve Bank of India (RBI) seeking clarity on its licensing policy for non-banking finance companies (NBFCs).

According to two people aware of the matter, RBI has been returning NBFC applications on the grounds that the parent entity of the proposed NBFC entity is not regulated or listed in the headquartered jurisdiction. The central bank has also been rejecting and returning licence applications of those NBFCs that have funding from Mauritius, contending that the country is included in the Foreign Action Task Force (FATF) grey list. Simply put, the funding entity is located in a jurisdiction identified by the FATF with weak measures to combat money...