NRI Investment FAQ

Can NRIs obtain loans for buying a house/flat for residential purpose from financial institutions providing housing finance?

Reserve Bank has granted general permission to certain financial institutions providing housing finance to grant housing loans to non-resident Indians for acquisition of houses/flats for self-occupation subject to certain conditions.


Q1.: Who is a Non-Resident Indian (NRI)?
Q2.: Who is a person of Indian Origin (PIO)?
Q3.: What is an OCB?
Q4.: Can NRIs and Overseas Corporate Bodies (OCBs) invest in India?
Q5.: How should purchase considerations for the residential immovable property be paid by foreign citizens of Indian origin under the general permission?
Q6.: Is there a limit to the number of investment in acquiring commercial properties in India?
Q7.: Can a person of Indian origin acquire any immovable property in India by way of inheritance?
Q8.: Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them?
Q9.: What is the approved method of sending remittances into India?
Q10.: At what rates are remittances in foreign currencies made by NRIs converted by banks into rupees?
Q11.: What is Foreign Exchange Management Act (FEMA)?
Q12.: Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?

Q1.: Who is a Non-Resident Indian (NRI)?
Ans.: An Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident.
(Person Posted in U.N organizations and official deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-temporary assignments are also treated as non-residents).

Non-resident foreign citizens of Indian Origin are treated on par with non resident Indian citizen (NRIs).

Q2.: Who is a person of Indian Origin (PIO)?
Ans: A Person of Indian Origin (PIO) is a citizen of any other country but whose ancestors were Indian nationals at least four generations away.

Q3.: What is an OCB?
Ans: Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India as also overseas trusts in which at least 60% of the beneficial interest is irrevocably held by such persons.

Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs as long as the ownership/beneficial interest held in them by NRIs continues to be at least 60%

Q4.: Can NRIs and Overseas Corporate Bodies (OCBs) invest in India?
Ans:

Investments by NRIs and OCBs are allowed, both, through the RBI route and also through the Government route, i.e., through the Foreign Investment Promotion Board (FIPB).
NRIs and OCBs are permitted to invest up to 100% equity in real estate development activity and civil aviation sectors.
Investment, made by the NRIs and OCBs, are fully repatriable, except in the case of real estate, which has a 3 year lock-in period on original investment and, 16% cap on dividend repatriation.
For those proposals that do not qualify under the automatic route, Government approval is granted through FIPB.
Q5.: How should purchase considerations for the residential immovable property be paid by foreign citizens of Indian origin under the general permission?
Ans: The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.

Q6.: Is there a limit to the number of investment in acquiring commercial properties in India?
Ans: No, as far as quantity of NRI investment is concerned in real estate investment in India there is no limit on the number of investments can be made in commercial properties in India.

Q7.: Can a person of Indian origin acquire any immovable property in India by way of inheritance?
Ans: A person of Indian origin, resident outside India, may acquire any immovable property in India by way of inheritance from a person, resident outside India, who had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. Immovable property, by way of inheritance, can also be acquired by a person of Indian origin resident outside from a person resident in India.

Q8.: Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them?
Ans: Yes. RBI will consider application from NRIs for remittance of assets, inherited by them in India. Such remittance may be permitted up to US$ 100,000 per year.

Q9.: What is the approved method of sending remittances into India?
Ans: The approved method of sending remittances into India is through normal banking channels.

Q10.: At what rates are remittances in foreign currencies made by NRIs converted by banks into rupees?
Ans: Such remittances will be converted by banks at the market rate of exchange.

Q11.: What is Foreign Exchange Management Act (FEMA)?
Ans: Residential status and nature of transaction i.e. capital account transaction (e.g. purchase/ sale of shares, property) or current account transaction (e.g. remittance of income on shares, property) are the cornerstones of FEMA. Under FEMA, certain types of transactions do not require RBI permission while others either require prior approval of RBI/ Government or it is mandatory to inform RBI of the same.

Q12.: Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?
Ans: Yes. A person of Indian origin resident outside India may transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India. A Person of Indian origin resident outside India may also transfer by way of gift agriculture land/farm house/plantation property in India to a person resident in India who is a citizen of India.