Many NRIs want to invest in the lucrative Indian market. There are several guidelines for NRIs to do so. Here are the Reserve Bank of India (RBI) guidelines for NRI Investment in India.
Repatriation of NRO funds
- Authorized dealers can permit remittances of upto USD 1 million.
- Authorized dealers can permit repatriation of sales proceeds of immovable property by NRIs, even if the property was held by the NRI for less than 10 years. This is if the cumulative period of the holding of the immovable property in India and the retention of the sale proceeds of the property in the NRO account is not less than 10 years.
Investment in India for NRIs
NRIs can invest in:
- Government Securities/Units with repatriation rights.
- Company shares/Debentures with repatriation rights.
- Shares/debentures of Indian companies through stock exchange under port-folio investment scheme with repatriation rights.
- Indian companies without any limit on non-repatriation basis, freely.
Immovable property for NRI Investment
NRIs can acquire:
- immovable property in India other than agricultural/plantation property or a farm house
NRIs can repatriate:
- sale proceeds of immovable property acquired in India out of your repatriable funds, without any lock-in period.
- refund of application/earnest money/purchase consideration made by house-building agencies/seller on account of non-allotment of flats/plots/cancellation of booking/deals for purchase of residential/commercial properties, together with interest, net of taxes, provided original payment is made out of NRE/FCNR(B) account/inward remittances.
- All people, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan, require prior permission of Reserve Bank for acquiring or transferring any immovable property in India.
Return to India for NRIs and their Investments
If an NRI decides to come back to India :
NRIs can continue to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India, if this currency, security or property was acquired, held or owned when the NRI was a resident outside of India.
NRIs can open, hold and maintain a Resident Foreign Currency (RFC) with an authorized dealer in India. This is an account to keep foreign currency assets. Assets held outside India at the time of return can be credited to an RFC account. The funds in the RFC accounts are free from all restrictions regarding utilization of foreign currency balances including any restriction on investment outside India.
Forex Facilities for NRIs
NRIs can obtain the following services without the permission from the Reserve Bank.
NRIs can have the following kinds of accounts with an authorized dealer in India such as a bank authorized to deal in foreign exchange.
- Non-Resident (Ordinary) Rupee Account – NRO Account
- Non- Resident (External) Rupee Account – NRE Account
- Foreign Currency Non Resident (Bank) Account
|Details||FCNR (B) Account||NRE Account||NRO Account|
|Joint account of two or more NRIs||Permitted||Permitted||Permitted|
|Joint account with another person, resident in India||Not permitted||Not permitted||Permitted|
|Currency in which account is denominated||Pound Sterling/ US Dollar/Jap.Yen/Euro||Indian Rupees||Indian Rupees|
|Repatriability –Principal||Freely repatriable||Freely repatriable||Not repatriable|
(except current income like rent, dividend, pension etc. and remittances indicated under “Repatriation of NRO Funds”)
|Interest||Freely repatriable||Freely repatriable||Freely repatriable|
|Foreign currency risk||Account holder is protected against changes in INR value vis-à-vis the currency in which the account is denominated.||Account holder is exposed to the fluctuations in the value of INR.||Account holder is exposed to the fluctuations, in the value of INR to the extent of interest amount.|
|Account Type||Term deposits only.||Current, Savings, Recurring, Fixed Deposits.||Current, Savings, Recurring, Fixed Deposits.|
|Period of fixed deposits||For terms not less than 1 year and not exceeding 3 years||For the periods as announced by the deposit taking bank.||For the periods as announced by the deposit taking bank.|
|Rate of interest||Banks are free to determine interest rates within the ceiling, if any, prescribed by the Reserve Bank||Banks are free to determine interest rates.||Banks are free to determine interest rates.|
|Rupee Loans in India against Security of the funds held in the account to :|
|Foreign currency loans outside India against security of the funds held in the account to :|
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Non-Resident (Ordinary) Rupee Account – NRO Account
Non- Resident (External) Rupee Account – NRE Account
Foreign Currency Non Resident (Bank) Account
USD 1 Million
RFC or Resident Foreign Currency Account.
Immovable property in India other than agricultural/plantation property or a farmhouse