| Q1. |
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| Ans. |
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.
(a) Direct Investment without Repatriation Benefits |
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| Q2. |
Is permission of Reserve Bank required for NRIs to invest in proprietary/partnership concerns on non- repatriation basis? |
| Ans. |
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. |
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| Q3. |
Is permission of Reserve Bank required for making investments in new issues of Indian companies on non- repatriation basis? |
| Ans. |
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). or chit fund or is not a Nidhi company. |
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| Q4. |
Are any formalities required to be completed by NRIs for getting the benefit of the above general permission? |
| Ans. |
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. |
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| Q5. |
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? |
| Ans. |
Yes. |
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| Q6. |
How can an NRI obtain permission of Reserve Bank for investment in a sick industrial unit? |
| Ans. |
Application for necessary permission should be made by the Indian company to the Central Office of Reserve Bank in Mumbai in form RSU.
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| Q7. |
Under the existing Industrial Policy, investment by foreign collaborators upto 51% of the equity is allowed by Reserve Bank on repatriation basis in certain high priority industries. Can NRIs take up the balance 49% equity in such cases on repatriation basis? |
| Ans. |
Yes. |
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| Q8. |
Can NRIs make investments in companies engaged in real estate development in India? |
| Ans. |
Yes. Investment upto 100% in the new issue of equity shares/convertible debentures of Indian companies engaged in the followed areas is allowed-
i) Development of serviced plots and construction of built up residential premises;
ii) Real estate covering construction of residential and commercial premises including business centres and offices;
iii) Development of township;
iv) City and region level urban infrastructure facilities including roads and bridges;
v) Manufacture of building material;
vi) Financing of housing development. |
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| Q9. |
What is the procedure for obtaining Reserve Bank permission in this regard? |
| Ans. |
Applications for the purpose should be made by the concerned Indian company to the Central Office of Reserve Bank in Mumbai in form ISD(R). |
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| Q10. |
Will repatriation of the original investment and/or dividend income be freely permitted? |
| Ans. |
Yes. Repatriation of original investment will be permitted after a lock-in period of three years from the date of issue of the equity shares/convertible debentures. In addition, OCBs will be permitted to repatriate net profit (upto 16 per cent) arising from the sale of such investment after the lick-in period of three year. Annual dividend/interest on equity shares/debentures can, however, be freely remitted subject to payment of tax. |
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| Q11. |
Are investments in Air Taxi operations permitted to be made by NRIs? |
| Ans. |
Yes. Investments upto 100% equity participation for carrying on Air Taxi.operations are permitted in terms of the guidelines issued by the Director General of Civil Aviation for Air Taxi operations. Applications for the purpose should be made to Reserve Bank (Central Office) in form ISD(R) by the concerned Indian company. |
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| Q12. |
Are there any restrictions on repatriation of the investment made under this scheme or income earned thereon? |
| Ans. |
No. However, repatriation of the investment and /or remittance of dividend will be permitted only after the expiry of five years of operation and only out of accumulated net foreign exchange earnings. |
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| Q13. |
Can NRIs invest in non-convertible debentures on repatriation basis? |
| Ans. |
Yes. Applications for necessary permission should be made to Reserve Bank (Central Office) by the concerned Indian company in form ISD. |
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| Q14. |
What is the procedure to be followed for making investment in the schemes of domestic Mutual Funds or public sector bonds with repatriation benefits? |
| Ans. |
The concerned Fund/Public Sector Undertaking should obtain necessary permission from Reserve Bank for issue of units/bonds to NRIs. Applications for the purpose are required to be made to the Central Office of Reserve Bank in form ISD(R). |
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| Q15. |
Can NRIs invest in 100% Export Oriented Units on repatriation basis? |
| Ans. |
Yes. NRIs will be permitted to invest up to 100% in 100% Export Oriented Units subject to obtaining approval from the Government of India ,Ministry of Industries (SIA) for setting up the EOU. In the case of units located in Export Processing Zones, approval from the Development Commissioner of the concerned zone is required to be obtained. Thereafter an application should be made to the concerned regional office of Reserve Bank in form ISD alongwith copy of Government approval for necessary clearance under FERA 1973. |
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| Q16. |
Can NRIs acquire shares disinvested by Government of India in Public Sector Enterprises (PSEs) by inviting sealed tenders? |
| Ans. |
Yes. Reserve Bank has granted general permission to NRIs to acquire shares of PSEs on their bids being successful provided the holding of a single NRI investor does not exceed one per cent of the paid up capital of the PSE concerned , the purchase consideration /bid money is paid by way of remittance from abroad or by debit to his NRE/FCNR accounts. |
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| Q17. |
What is the procedure for issue of rights entitlement to NRIs? |
| Ans. |
The concerned company should approach Reserve Bank for issue of rights entitlement to NRIs in the prescribed form if on repatriation basis. However, rights entitlement on non-repatriation basis would be covered by the general permission (Please see Answer to Question No. 52 and 53). |
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| Q18. |
What is the procedure required to be followed by NRIs for renunciation of rights entitlement? |
| Ans. |
NRIs can make an application to Reserve Bank by a letter detailing therein the folio number of the shares held and the manner in which the rights are being sold. |
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| Q19. |
What is the procedure for issue of bonus shares? |
| Ans. |
The concerned Indian company should approach Reserve Bank for issue of bonus shares to NRIs if the original investment is on repatriation basis. Issue of bonus shares in respect of investment on non-repatriation basis is covered by general permission (Please also see Answer to Question No. 52). |
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| Q20. |
Can NRIs obtain loans abroad against the collateral of share/debentures of Indian companies? |
| Ans. |
Yes. Authorised dealer have been permitted to grant loans/overdrafts abroad to NRIs through their overseas branches and correspondents against collateral of the shares/debentures of Indian companies held by them, provided the concerned shares/debentures were acquired on repatriation basis. |
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| Q21. |
Can sale proceeds of the shares/debentures be remitted abroad for liquidation of outstanding against such loans/overdrafts? |
| Ans. |
Yes, subject to payment of Income tax, Capital Gains tax etc. payable, if any. |
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