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Investment in Residential Property 100% Scheme for High Priority Industries. NRIs and Overseas Corporate Bodies (OCBs) predominantly owned by NRIs can invest with full repatriation benefits upto 100% in the new issues of equity capital or convertible debentures of a private/public limited company in high priority industries, listed in the New Industrial Policy (NIP) Statement. Approvals for such investments are granted on automatic basis by RBI. RBI has siplified the procedure for investments by NRIs and OCBs in Indian companies under the 100% scheme. The Reserve Bank of India has decided that Indian Companies no longer require invward remittances and issuance of shares to these entities. However, these companies will have to file the required documents with the Reserve Bank within 30 days after the issue of sahres. 51% Scheme for New Issues NRIs and OCBs are permitted to subscribe upto 51% of the face value of new issues of shares or convertible debentures of any new or existing company engaged in the manufacturing activities with automatic approval given by the RBI. Investment in Housing and Real Estate Development RBI has given permission to NRIs/OCBs to invest on repatriable basis upto 100% in the new issues of equity shares/convertible debentures by an existing or new company engaged or proposing to engage in the following activities:
Repatriation of original investment will be permitted after a lock in period of three years from the date of issue of the equity shares/convertible debentures. Annual dividend on equity shares/interest on debentures can, however, be freely repatriated, subject to payment of applicable taxes. In case of OCBs, net profit (upto 16%) arising from the sale of such investment after the lock-in period of three years can also be repatriated. The RBI permission is not required for acquiring/ holding or transfer/disposal of immovable properties by Indian citizens resident outside India. Indian citizens holding immovable property in India but who acquire foreign citizenship at a later date are required to take permission from the RBI for continuing to hold the immovable properties. Investment in Air Taxi Operations NRIs/OCBs are allowed 100% equity participation in Indian companies carrying on Air Taxi Operations in terms of guidelines issued by the Director General of Civil Aviation. Repatriation of the investment and/or remittance of dividend will be permitted only after the expiry of five years of operation and only out of accumulated net foreign exchange earnings. In this sector, foreign equity investment upto 40% is allowed. Revival of Sick Units NRIs/OCBs are permitted, on application ,to participate in the revival of sick industrial units in India by making bulk investment upto 100% either by way of purchase of existing equity shares or by subscribing to new equity issues of the sick company. Repatriation of original capital is allowed. Investment in FTZ, EPZs and EOUs NRIs/OCBs can invest upto 100% on repatriation basis in companies/firms setting up units anywhere in India, in Free Trade Zones (FTZ) or Export Processing Zones (EPZs) or setting up units under the 100% Export Oriented Units (EOUs) Scheme.
NRIs can invest upto 40% of the paid up capital in the banking service sector. Trading Houses/Export Houses 100% NRI equity for establishing Trading/Export Houses is allowed with the automatic approval given by the RBI. Investment in Non-Convertible Debentures Indian companies desiring to issue non-convertible debentures to NRIs and OCBs should submit their applications in Form ISD to the RBI for necessary permission. Deposits with Companies NRIs/OCBs are permitted to place funds in fixed deposits with public limited companies (including Government undertakings with limited liability) with full repatriation benefits for a period of three years. The total amount of fixed deposits permitted to be accepted will be stipulated by the RBI in individual cases. Application is to be made by the Indian company to the RBI for permission to accept the deposits. Investment in the Schemes of Domestic Mutual Funds NRIs/OCBs are permitted to invest in the schemes of all domestic public sector/private mutual funds floated on repatriation basis. Applications for necessary permission should be made by the concerned mutual fund to RBI. The non-resident investors do not need separate approval from RBI for the purpose. Investment in Bonds Issued by Public Sector Undertakings. NRIs/OCBs are permitted to invest in bonds issued by Public Sector Undertakings (PSUs) in India with repatriation benefits. The concerned PSUs should obtain the necessary approval from Government of India for raising funds through issue of bonds. Necessary application for permission is to be made by the concerned PSU to RBI in Form ISD (R). General Permission to NRIs/OCBs to purchase Shares of Public Sector Enterprises. NRIs/OCBs can purchase the shares on repatriation basis disinvested by Government of India in certain Public Sector Enterprises (PSEs) against convertible foreign exchange money received through normal banking channels or by transfer of funds held in investor's NRE/FCNR accounts. Investment in Securities/Shares
NRIs are permitted to invest their funds in
Government Securities or Units of UTI, National
Savings Certificates through authorised dealers.
Units can also be purchased directly from UTI and
freely transferred and sold.
Portfolio Investment Scheme
Under this scheme NRIs/OCBs are permitted to
invest in shares/debentures of Indian companies
through Stock Exchanges in India. These
investments require prior approval of RBI which
is valid for a period of five years and can be
renewed upon written request. The investment limit by a single NRI/PIO/OCB for purchase of shares in a company through stock exchanges under portfolio investment shceme has been raised to 5% and the aggregate limit for all NRIs/PIOs/OCBs raised to 10% of the paid up equity capital. The overall ceiling of investment by
NRIs and FIIs has been raised to 30% if the
company concerned passes a resolution to that
effect in its General Body meeting. The lock-in
period of one year, prescribed earlier, for
investment made on repatriation basis has since
been removed.
Residential Property Indian Citizens Indian citizens who are residing abroad are not required to obtain permission of RBI for purchase of immovable property for residential use. Foreign Citizens of Indian Origin RBI has granted general permission to foreign citizens of Indian origin, whether resident in India or not, to acquire by purchase or inheritance, hold and transfer or dispose of by way of sale or inheritance immovable property in India for residential purpose. The purchase consideration should be met out of inward remittances in foreign exchange or out of funds from NRE/FCNR accounts maintained with banks in India. A declaration in the prescribed form has to be submitted to the RBI within a period of 90 days from the date of purchase of the property. The property can be let out if it is not immediately required for residence. The sale proceeds can be repatriated to the extent of the foreign exchange invested only in case of properties purchased after 26 May, 1993, and held for at least three years for upto two residential properties with prior RBI permission.
The RBI has also delegated the powers to
authorized dealers (Banks) to grant loans to NRIs
against the security of NRE/FCNR deposits
(subject to certain conditions) for purchase of
immovable property. There is also no limit on the
number of properties an NRI can buy.
Source: Indian Investment Centre Last Update: August 31, 1998 |
