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FAQ(Frequently Asked Questions)

Q. Which are the banks that provide home loan to NRIs?

State Bank of India, ICICI, HDFC, Citibank etc..

Q. What kind of home loans are there for NRIs?

  • To purchase/construct a new house / flat
  • To repair, renovate or extend an existing house/flat
  • To purchase an existing house/flat
  • To purchase a plot for construction of a dwelling unit.
  • To purchase furnishings and consumer durables, as a part of the project cost

Q. What is the Eligibility criteria?

  • Minimum age 21 years
  • Valid Indian Passport (for NRIs)/ valid foreign passport (for PIOs)
  • Salaried individual with at least 2 years of work experience Must have a steady gross annual income (Minimum amount varies from each Bank)

Q. What documents are required to get these loans?

  • Passport size photograph
  • Copy of passport with Visa page
  • Driving license/PAN Card Income/Financial Details Documents: for Self-employed & Salaried individuals.Latest Salary Slip
  • Last six month's bank statement reflecting salary credit Property Documents.
  • Latest Sale Deed with previous chain link
  • Allotment Letter, Payment plan and Receipts for under construction properties.

Q. What is minimum and maximum loan amount a NRi can get?

You can avail a loan of any amount ranging from INR 5 lakhs to INR 1 crore. The loan amount is subject to:
  • Your repaying capacity
  • The scheme-wise caps

Q. What types of bank accounts can be opened by NRIs/OCBs in India?

NRIs/OCBs can open the following types of accounts with banks in India, which hold authorised dealer licences, as also other banks, specifically authorised by the Reserve Bank to maintain accounts in the names of NRIs/OCBs.

Rupee Accounts:-
Non-Resident (Ordinary) Account - NRO A/c.
Non-Resident (External) Rupee Account - NRE A/c.

Foreign Currency Accounts:-
Non-Resident (Foreign Currency) Account - FCNR A/c. (in Pounds, Sterling, US Dollars, Japanese Yen and Euro).

A person, resident in India, who is earning foreign exchange, is also permitted to maintain a Foreign Currency account in India with an authorised dealer bank, to the extent of 50% of such foreign exchange earnings, under the Exchange Earners Foreign Currency Account (EEFC) Scheme.

Q. What are the special features of each account?

The special features are as under:

NRO A/c.: The funds, standing to the credit of this account, cannot be repatriated outside India in foreign exchange, without prior permission of the Reserve Bank of India. Interest, earned on these accounts, is, however, eligible for repatriation outside India, net of Indian taxes. The remittance of interest (net of taxes) will be permitted by the authorised dealer, where the account is maintained, if the account holder makes an application to the authorised dealer, in the prescribed form. No RBI permission is required for remittance of interest.

NRE A/c.: The funds, standing to the credit of this account, as well as interest earned thereon, are remittable outside India in free foreign exchange, without permission of the RBI. The interest income is not subject to Indian Income-tax. Credits to the accounts should be in the form of remittance in foreign exchange from outside India, as well as other funds, which are eligible to be remitted outside India, in free foreign exchange. Funds, emanating from local sources, are not eligible to be credited to these accounts, unless these funds are otherwise remittable outside India, in terms of the existing Exchange Control Regulations.

FCNR A/c.: These accounts can be opened in four foreign currencies:c Pounds Sterling
US Dollars
Japanese Yen
Euro

For the purpose of opening an account, remittance in foreign exchange, in the same currency, should be received in India. The accounts can be opened only as fixed deposits, with a minimum maturity of one year and, a maximum maturity of three years. The principal, as well as interest, earned on these accounts, is remittable outside India, in the same currency or, in other convertible currency, as desired by the account holder. The interest, earned on these deposits, is exempt from Indian Income-tax.

Q. Can Non Resident accounts be opened/ operated by the Power of Attorney holder in India, on behalf of the non-resident?

The accounts cannot be opened by the Power of Attorney holder in India. However, the latter can operate the accounts for the purpose of local payments to be made on behalf of the non-resident account holder. The Power of Attorney holder is not permitted to make gifts from these accounts and, is not allowed to make remittances outside India.

Q. What happens to the status of these accounts when the non-resident holder becomes a person, resident in India?

The accounts are to be re-designed as resident accounts, when the non-resident account holder becomes a person, resident in India. In the case of fixed deposits opened by the account holder, before becoming resident in India, the contracted rate of interest will be paid till maturity of the deposits. Similarly, FCNR deposits will be eligible to be held in respective currencies till maturity of the deposits, even after the non-resident holder become a resident in India. He will, however, cease to get tax exemption on interest on the erstwhile deposits (NRE/FCNR deposits), after he becomes resident in India. In certain situations, it might be advisable for the account holder to convert the account to a Resident Foreign Currency Account Deposit (RFC)

Q. What are the various facilities available to NRIs/OCBs?

The facilities available to NRIs/OCBs for making investment in India are as follows:
  • Opening and maintenance of bank accounts in India.
  • Investment in shares and securities of Indian companies, government securities, units of domestic mutual funds and ,deposits with Indian companies/firms.
  • Investment in immovable properties in India.
  • Investment in proprietorship/partnership concerns in India.

Q. Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them?

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.

Q. Can a person of Indian origin acquire any immovable property in India by way of inheritance?

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.

Q. Can NRIs and Overseas Corporate Bodies (OCBs) invest in India?

The Government of India has adopted a liberal policy, with respect to investments by NRIs and OCBs in India. Such investments 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.

Q. What is the extent and application of Foreign Exchange Management Act (FEMA)?

FEMA extends to the whole of India. It also applies to all branches, offices and agencies outside India, owned or controlled by a person, resident in India. It also applies to any contravention, there under, committed in or, outside India, by any person to whom the Act applies.

Q. What is the penalty for contravention of FEMA?

Any person, contravening FEMA, shall be liable, upon adjudication, to a penalty up to three times the sum involved in such contravention, where such amount is quantifiable, or up to Rupees Two hundred thousand, where the amount is not quantifiable. In addition, where such contravention is a continuing one, the person will be liable to further penalty, which may extend to Rupees Five thousand for every day after the first day, during which the contravention continues.

Q. Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?

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.

Q. Can an NRI account be opened in the name of crew members of shipping companies?

Yes. NRI accounts can be opened in the name of crew members of shipping companies if their posting is not based in India and they derive their income from abroad in foreign currency.

Q. Who is a person of Indian Origin?

For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India
  1. A foreign citizen (other than a citizen of Pakistan or Bangladesh)is deemed to be of Indian origin, if,
    1. He, at any time, held an Indian passport, or
    2. He or either of his parents or any of his grand parents was citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955).
  2. For investments in immovable properties
    A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka, or Nepal), is deemed to be of Indian origin if,
    1. He held an Indian passport at any time, or
    2. He or his father or paternal grand-father was a citizen of India by virtue of the (Constitution of India or the Citizenship Act, 1955 (57 of 1955).

Q. Who is eligible?

Person of Indian origin" means a foreign citizen not being a citizen of Pakistan, Bangladesh and other countries as may be specified by the Central Government from time to time if.
  1. he/she at any time held a Indian passport
  2. ii. he/she or either of his/her parents or grand parents or great grand parents was born in and permanently resident in India as defined in the Government of India Act, 1935 and other territories that became part of India thereafter provided neither was at any time a citizens of any of the aforesaid countries (as referred to in 2(b)above; or
  3. He/she is a spouse of a citizen of India or a person of Indian origin covered under (i) or (ii) above.

Q. What is the fee for the PIO Card?

Fee for new PIO Card for adult - US $ 310.00
Fee for new PIO Card for children below the age of 18 years - US $ 155.00

Q. What is the validity of the PIO Card?

20 years subject to the validity of the passport.
Note: The PIO Card will be valid only when accompanied with a valid passport.

Q. Can NRIs make investments in companies engaged in real estate development in India?

Yes. Investment up to 100% in the new issue of equity shares/convertible debentures of Indian companies engaged in the following areas is allowed
  1. Development of serviced plots and construction of built up residential premises.
  2. Real estate covering construction of residential and commercial premises (including business centers and offices.
  3. Development of township.
  4. City and region level urban infrastructure facilities including roads and bridges.
  5. Manufacture of building material.
  6. Financing of housing development.

Q. Is permission of Reserve Bank required for NRIs to invest in proprietary/partnership concerns on non-repatriation basis??

No. Reserve Bank has granted general permission to non-resident individuals of Indian nationality/origin to invest by way of capital contribution in any proprietary or partnership concern in India on non-repatriation basis provided the investee concern is not engaged in agricultural/plantation activity or real estate business. This facility is, however, not available to OCBs.

Q. What are the schemes available to NRIs for direct investments in India with repatriation benefits?

NRIs can make investments in new issues of shares/convertible debentures of Indian companies under direct investment schemes such as 24% scheme/51% scheme/100% scheme. They can also invest in the schemes of domestic Mutual Funds floated by public/private sector institutions/companies. Non-resident investors are not required to apply for permission to invest. The company concerned will have to file a declaration in Form ISD together with the required documents to Reserve Bank within 30 days from the date of issue.

Q. What is 24% Scheme?

Under the 24% Scheme, Indian companies engaged or proposing to engage in any activity including finance, hire purchase, leasing, trading or other services, establishment of schools/colleges, etc. (except agricultural/plantation activities) are allowed to issue shares/debentures to NRIs with repatriation benefits to the extent of 24% of the new issue.

Q. What is 51% Scheme?

Under the 51% Scheme, NRIs/OCBs are permitted to subscribe to new issues of equity/preference shares and convertible debentures of any new or existing company on repatriation basis provided
  1. The issue of equity/preference shares and convertible debentures to NRIs/OCBs with repatriation benefits does not exceed 51 per cent of the face value of each new issue of the company.
  2. The shares of the company are not listed on any stock exchange, and
  3. The company is engaged in manufacturing activity not being an activity specified in Annexure III to the Statement of Industrial Policy 19991 of Government of India amended from time to time.
Investment under this scheme can be made for setting up new manufacturing projects or for expansion/diversification of their existing manufacturing activities.

Q. How does an NRI obtain permission of Reserve Bank for investment under the 24% or 51% or 100% Scheme?

The NRI investor need not apply to Reserve Bank. Indian companies have been permitted to issue shares/convertible debentures to NRIs/OCBs. They have to file declaration in Form ISD together with the required documents to Reserve Bank within 30 days from the date of issue.

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