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NRI FAQ's

1. Who is a non-resident Indian (NRI)?

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. (Persons posted in U.N. organizations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs) for the purpose of certain facilities.

2. What is an OCB?

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 so long as the ownership/beneficial interest held in them by NRIs continues to be at least 60%

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

NRIs/OCBs are granted the following facilities: Maintenance of bank accounts in India. Investment in securities/shares of, and deposits with Indian firms/ companies. Investments in immovable properties in India.

4. Can NRI's invest in companies in India?

NRIs are permitted to make direct investments in proprietary/partnership concerns in India as also in shares/debentures of Indian companies.They are also permitted to make portfolio investments i.e. purchase of shares/debentures of Indian companies through stock exchanges in India. These facilities are granted both on repatriation and non repatriation basis.

5. 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 any agricultural/plantation activity or real estate business. This facility is, however, not available to OCBs.

6. Is permission of Reserve Bank required for making investments in new issues of Indian companies on non- repatriation basis?

No. Indian companies have been granted general permission to accept investments on non-repatriation basis, in shares/convertible debentures by way of new/rights/bonus issue provided the investee company is not engaged in agricultural /plantation activity or real estate business(excluding real estate development i.e. development of property and construction of houses).

7. Are any formalities required to be completed by NRIs for getting the benefit of the above general permission?

No. However, the firms/companies concerned are required to file declarations with Reserve Bank in form DIN giving particulars of the investments made. Within ninety days from the date of the investment.

8. Can NRI individuals make investments in domestic public/private sector Mutual Funds or Money Market Mutual Funds floated by commercial banks and public/private sector financial institution on non/repatriation basis?

Yes.

9. Can Overseas Corporate Bodies make similar investments in mutual funds on non-repatriation basis?

OCBs can make such investments only in domestic public/ private sector Mutual Funds. They can also make investments in Money Market Mutual Funds.

10. Can NRIs make investments in non-convertible debentures of Indian companies?

Yes. Applications for necessary permission should be made to Reserve Bank (Central Office) by the concerned Indian Company in form ISD.

11. Can NRIs purchase existing shares/debentures of Indian companies by private arrangement?

Yes. Reserve Bank permits NRIs on application in form FNC 7, to purchase shares/debentures of existing Indian companies on non-repatriation basis. An undertaking about non-repatriation is to be given in form NRU.

12. Is it necessary for a resident, holding securities in Indian companies, to secure any approval from Reserve Bank on his becoming a non-resident for holding such securities?

No. Reserve Bank has granted general permission to companies in India to enter the overseas addresses of the shareholders in their books in such cases provided the companies obtain undertakings from the holders that they will not seek repatriation of any income or sale proceeds of the security.

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