India Investment Property

NRI and PIO can make payment for purchase of residential and commercial property either by fund paid to India through normal banking channel or by funds held in NRE / FCNR (B) / NRO account maintained in India. Payment can not be made either by traveler’s cheque or by foreign currency notes. Payment can not be made outside India. If there is refund of application money or payment made by the building agencies or seller due to non-allotment of flat or plot or due to cancellation of bookings or contracts then the amount of refund with interest can be credited to NRE account. This is subject to the condition that the original payment was made by way of inward remittance or by debit to NRE / FCNR (B) account. For more information, please refer to A.P. (DIR) Series Circular No.46 dated 12.11.2002.

NRI and PIO can avail of loan from an authorized dealer for purchasing flat or house in India for his own residential use against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account. Such loans are subject to the terms and conditions as laid down in Schedules 1 and 2 to Notification No. FEMA 5/2000-RB dated May 3, 2000 as modified from time to time. However, banks cannot issue fresh loans or renew existing loans in excess of Rupees 20 lakh against NRE and FCNR (B) deposits either to the depositors or to third parties. Such loans can be repaid by way of inward remittance through normal banking channel or by debit to his NRE / FCNR (B) / NRO account or out of rental income from such property or by the borrower’s close relatives through their account in India by crediting the borrower’s loan account.

In case the amount has been received from inward remittance or debit to NRE/FCNR (B)/NRO account for purchasing the property or for repayment of the loan, the principal amount can be repatriated outside India. Repatriation outside India means the buying or drawing of foreign exchange from an authorized dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorized dealer from which it can be converted in foreign currency. In case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India, the amount can be credited to the NRO account of the NRI/PIO. The amount of capital gains arising out of sale of the property can also be credited to the NRO account. NRI or PIO is also allowed by the Authorized Dealers to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account.

NRI or PIO can avail of housing loan in rupees from an authorized dealer or housing finance institution in India approved by the National Housing Bank for purchase of residential accommodation or for the purpose of repairs, renewal or expansion of residential accommodation. Such loan can be repaid by way of inward remittance through normal banking channel or by debit to his NRE / FCNR (B) / NRO account or out of rental income from such property or by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.

NRI or PIO can also avail of housing loan in rupees from his employer in India. For terms and conditions, please refer to Regulation 8A of Notification No. FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR Series) Circular No.27 dated October 10, 2003. For more information, please refer to www.rbi.org.in.