Ans.

"Non-Resident Indian (NRI) means a person resident outside India who is a citizen of India or is a person of Indian origin".

Ans.

For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India:

Person of Indian origin means a citizen of any country other than Pakistan or Bangladesh, if

(a)he at any time, held an Indian passport; or

(b)he or either of his parents or any of his grand-parents was a citizen of India by virtue of the constitution of India or Citizenship Act, 1955 (57 of 1995); or

(c)the person is a spouse of an Indian citizen or a person referred to in clause (a) or (b)

For investments in immovable properties:

Person of Indian origin means an individual (not being a citizen of Pakistan or Bangladesh or Afghanistan or Bhutan or Sri Lanka or Nepal or China or Iran), who at any time, held an Indian passport or who or either of whose father or whose grandfather was a citizen of India by virtue of the Construction of India or the Citizenship Act, 1955 (57 of 1955)

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 te 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%

Ans.

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.

Ans.

A. GENERAL PERMISSIONS

Reserve Bank has granted general permission to NRIs/PIOs, for undertaking direct investments in Indian companies, under the Automatic Route purchase of shares under Portfolio Investment Scheme, investment in companies and proprietorship/partnership concerns on non-repatriation basis and for remittances of current income. NRIs/PIOs do not have to seek specific permission for approved activities under these schemes.

The Reserve Bank of India has now further simplified financial transactions by NRIs/PIOs by granting general permissions to:

• Resident individuals, partnership/proprietorship concerns to avail of interest bearing rupee loans from NRIs/PIOs out of funds remitted by them from abroad or out of funds held in their bank accounts in India, on non-repatriation basis, subject to certain conditions one of them being that the rate of interest on such loans should not exceed Bank Rate plus two percentage points.
• NRIs/PIOs to transfer by way of gift, shares held by them in Indian companies and to transfer by way of gift, immovable property, held by them in India subject to compliance with other applicable rules/regulations including the provisions of Foreign Contribution Regulations Act, 1976 by the charitable trust/oranisation concerned.
• All domestic public/private sector mutual funds for issue of Units to NRIs/PIOs/OCBs on both repatriation as well as non-repatriation basis.
• NRIs/PIOs/OCBs to place deposits wit Indian firms, on non-repatriation basis and with Indian companies including Non-banking financial companies on both repatriation and non-repatriation basis.
• NRIs/PIOs/OCBs for sale of shares acquired under direct investment Schemes on stock exchanges in India.
• NRIs/PIOs/OCBs have been granted General Permission to invest in Government Securities and Treasury Bills.

Taking into account the facilities that are already available, and the above new measures, NRIs/PIOs will not have to seek specific permission of the Reserve Bank for a whole variety of approved financial/investment transactions. This should considerably reduce paper work and time taken for undertaking such transactions.

After the above changes come into effect, the areas in which facilities available to NRIs/PIOs/OCBs will be the same as available to domestic residents except relating to investment by NRIs/PIOs/OCBs in real estate/agriculture and plantation business Chit Funds, Nidhis or Print Media.

Ans.

(i) Bank Accounts and Deposits

• NRE Accounts (Principal/interest repatriatable)

Savings - Interest is paid at par with domestic deposits. Currently it is 3.5 per cent.

Term deposits - Fixed or floating rates of interest within the ceiling rate announced by RBI from time to time. At present the rate is USD LIBOR/SWAP rates of corresponding term plus 100 basis points *.

• FCNR(B) (Principal/interest on repatriation basis)

Term deposit can be placed with Authorized Dealers in India in 4 specific foreign currencies ($, £, euro and ¥).

Rate of Interest - Fixed or floating within the ceiling rate of LIBOR/SWAP rates for the respective currency/corresponding term minus 25 basis points (except ¥).

• NRO Accounts (Current earnings on repatriation basis)

Savings - Normally operated for crediting rupee earnings / income such as dividends, interest. Currently the interest rate is 3.5 per cent.

Term Deposits - Banks are free to determine interest rates.

d) Repatriation from NRO balances

Authorised Dealers can allow remittance/s up to USD 1 million, for any purpose per calendar year from balances in NRO accounts subject to payment of applicable taxes. The limit of USD 1 million per year includes sale proceeds of immovable properties held by NRIs/PIOs for a period of 10 years. In case a property is sold after being held for less than 10 years, remittance can be made if the sale proceeds have been held by the NRI/PIO for the balance period.

(ii) Other Investments on repatriation basis:

• Government dated securities/treasury bills.
• Units of domestic mutual funds.
• Bonds issued by a public sector undertaking (PSU) in India.
• Shares in Public Sector Enterprises being dis-invested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.
• Shares and convertible debentures of Indian companies under FDI scheme (including automatic route & FIPB).
• Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme.
• Deposits with Indian companies, non-banking finance companies registered with RBI, housing finance companies and other financial institutions.

(iii) Other Investments on non-repatriation basis:

• Units of Money Market Mutual Funds in India.
• The capital of a firm or proprietary concern in India, not engaged in any agricultural or plantation activity or real estate business.

(iv) Investment in immovable Property :

• May acquire immovable property in India other than agricultural/plantation property or a farmhouse out of fund available on non- repatriation or repatriation basis.
• May repatriate
• Sale proceeds of immovable property acquired in India to the extent of repatriable funds used for acquiring the property, without any lock-in period, up to two residential properties. The balance will be repatriable through NRO Account subject to conditions mentioned at item (i)(d).
• refund of (a) application/earnest money/ purchase consideration made by house-building agencies/seller on account of non-allotment of flats/plots and (b) 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.

(v) Facilities to returning NRIs/PIOs:

Returning NRIs/ PIOs

• may continue to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India, if such currency, security or property was acquired, held or owned when resident outside India.
• may open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account to transfer balances held in NRE/FCNR(B) accounts. Proceeds of assets held outside India at the time of return, can be credited to RFC account. The funds in RFC accounts are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment in any form outside India.
• The rate was revised to not more than 25 basis points above the LIBOR/SWAP rates for US dollar with affect from close of business in India on October 18, 2003.