Chapter I : General  (Q.1 to Q.5)

 2A. General:
Q.6 Can accounts be maintained by NRIs with any bank in India?
Q.7 Are NRIs permitted to maintain accounts in rupees and in foreign currency?
 

2B. Rupee Accounts
Q.8 What are the different types of rupee accounts permitted to be maintained?
Q.9 Can NRIs maintain current/savings/fixed deposit rupee accounts with authorised dealers/authorised banks in India?
Q.10 Can proceeds of foreign currency notes/travellers cheques be credited to NRE accounts without any restriction?
Q.11 Can NRE accounts be opened by the power of attorney holder in India on behalf of a non-resident?
Q.12 Can resident Power of Attorney holder operate on the NRE accounts?
Q.13 Can Power of Attorney holder credit proceeds of foreign currency notes/bank notes and travellers cheques to the NRE accounts?
Q.14 What is the distinction among NRE account NRSR account and NRO account?
Q.15 Can NRO/NRE/NRSR accounts be maintained by NRIs jointly with residents?
Q..16 What is the rate of interest payable on such accounts?
Q.17 Are debits and credits to NRO accounts allowed freely by banks maintaining the accounts?
Q.18 What are the admissible debits and credits to NRE accounts?
Q.19 Can funds in NRE/NRO/NRSR accounts be repatriated outside India?
Q.20 Can funds in NRE/NRO/NRSR accounts be utilised for payment of air fare to/from and other travel related expenses    in India of the account holder and/or his dependents?
 Q.21 Are temporary overdrawings permitted in NRO Savings Bank accounts?
 Q.22 Are NRO/NRE/NRNR account holders eligible for loans/overdrafts against their fixed deposits?
 Q.23 What are the rates of interest charged on such loans?
 Q.24 Can loans raised against NRE fixed deposits be repaid out of funds in NRO/NRSR accounts?
 Q.25 Can a third party in India take loans against the NRO fixed deposit accounts of NRI?
 Q.26 Is nomination allowed in NRO/NRE/NRSR accounts?
 Q.27 Is repatriation of funds belonging to non-resident nominees permitted?
 Q.28 Is transfer of funds between NRE accounts maintained by two different account holders permitted?
 Q.29 At what rates are remittances to India by NRIs for credit to NRE/NRO/NRNR/NRSR accounts converted into rupees?
 Q.30 Is there any scheme under which non-residents other than NRIs can also keep rupee deposits with banks in India?
 Q.31 How should an account under the Non-Resident Non-repatriable (NRNR) Rupee Deposit Scheme be opened?
 Q.32 Can the principal or the interest accrued on NRNR deposits be repatriated outside India at any time?
 Q.33 Can the principal together with the interest accrued on NRNR deposits be renewed, on maturity?
 Q.34 Can loans/overdrafts be availed of against the security of NRNR deposits?
 Q.35 What is the status of NRO/NRSR/NRE accounts on the return of the account holder to India?
 Q.36 Does the account holder suffer any loss of interest on such redesignation of accounts?
 

2C. Foreign Currency Accounts
 Q.37 Can accounts be maintained by NRIs/OCBs in foreign currencies?
Q.38 What are the foreign currencies in which such accounts can be maintained?
Q.39 Are FCNR accounts permitted to be maintained in the form of current/savings accounts?
Q.40 Is premature withdrawal of the FCNR term deposit allowed?
Q.41 What is the penalty for premature withdrawal of a FCNR deposit?
Q.42 If a FCNR deposit of 6 months maturity is withdrawn prematurely, would any interest be payable?
Q.43 Are the interest rates on FCNR deposits liable for periodical revision?
Q.44 What about debits to FCNR accounts for local payments?
 Q.45 Are funds in FCNR accounts freely repatriable abroad?
 Q.46 Can FCNR deposits be held jointly with residents?
 Q.47 Is nomination allowed in FCNR accounts?
 Q.48 Is repatriation of FCNR funds to non-resident nominees permitted?
 Q.49 What is the status of FCNR accounts on the return of the account holder to India?

CHAPTER 3. Investments in Securities/Shares and Company Deposits (Q.50 to Q. 102)

3A. Government Securities/Units
Q.50 Can NRIs invest their funds in Government securities or Units of Unit Trust of India (UTI)?
Q.51 Can NRIs make investments in National Savings Certificates issued by Post Offices in India?
Q.52 Can Government securities/units be freely transferred or sold?
Q.53 Are sale/maturity proceeds of Government securities/Units/National Savings Certificates allowed to be repatriated abroad?

3B. Company Shares/Debentures
3B.1 Direct Investment without Repatriation benefits
Q.54 Is permission of Reserve Bank required for NRIs to invest in proprietary/partnership concerns on non-repatriation basis?
Q.55 Is permission of Reserve Bank required for making investments in new issues of Indian companies on non-repatriation basis?
 Q.56 Are any formalities required to be completed by NRIs for getting the benefit of the above general permission?
 Q.57 Can NRI/OCBs make investments in domestic public/private sector Mutual Funds or Money Market Mutual Funds floated by commercial banks and public/private sector financial institutions on non-repatriation basis?
 Q.58 Can NRIs make investments in non-convertible debentures of Indian companies?
 Q.59 Can NRIs purchase existing shares/debentures of Indian companies by private arrangement?
 Q.60 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?
 Q.61 Is income/interest earned on investments/deposits held in India by NRIs on non-repatriation basis allowed to be repatriated?
 Q.62 What is the procedure to be followed for seeking repatriation in such cases?
 

3B.2 Direct Investment with Repatriation benefits
 Q.63 What are the schemes available to NRIs for direct investments in India with repatriation benefits?
 Q.64 What is 24% Scheme?
 Q.65 What is 51% Scheme?
 Q.66 Is remittance of interest/dividend to NRI investors freely allowed under the 24%/51% Scheme?
 Q.67 What are the specified industries under the 100% Scheme?
 Q.68 Is dividend/interest earned in respect of investments made under the 100% Scheme freely remittable to the NRIs abroad?
 Q.69 How does an NRI obtain permission of Reserve Bank for investment under the 24% or 51% or 100% Scheme?
 Q.70 Besides the 24%, 51% and 100% Schemes is there any other scheme for investment by NRIs in the equity of Indian companies?
 Q.71 Is the capital brought into India for revival of a sick industrial unit allowed to be repatriated?
Q.72 How can an NRI obtain permission of Reserve Bank for investment in a sick industrial unit?
Q.73 Under the existing Industrial Policy, investment by foreign collaborators upto 50%/51%/74% of the equity is allowed by Reserve Bank on repatriation basis in certain high priority industries. Can NRIs take up the balance 50%/49%/26% equity in such cases on repatriation basis?
Q.74 Can NRIs make investments in companies engaged in real estate development in India?
Q.75 What is the procedure for obtaining Reserve Bank permission in this regard?
Q.76 Will repatriation of the original investment and/or dividend income be freely permitted?
Q.77 Are investments in Air Taxi operations permitted to be made by NRIs/OCBs?
Q..78 Can NRIs invest in non-convertible debentures on repatriation basis?
Q.79 What is the procedure to be followed for making investment in the schemes of domestic Mutual Funds with repatriation benefits?
 Q.80 Can NRIs invest in 100% Export Oriented Units on repatriation basis?
 Q.81 Can NRIs acquire shares disinvested by Government of India in Public Sector Enterprises (PSEs) by inviting sealed tenders?
 Q.82 What is the procedure for issue of rights entitlement to NRIs?
 Q.83 What is the procedure required to be followed by NRIs for renunciation of rights entitlement?
 Q.84 What is the procedure for issue of bonus shares?
 Q.85 Can NRIs obtain loans abroad against the collateral of shares/debentures of Indian companies?
 Q.86 Can sale proceeds of the shares/debentures be remitted abroad for liquidation of outstandings against such loans/overdrafts?
 

3B.3 Portfolio Investment Scheme
Q.87 What is the Portfolio Investment Scheme?
Q.88 What is the procedure for making applications?
Q.89 What is a designated branch?
Q.90 Whether NRI/OCB can apply through more than one designated branch?
Q.91 Is it necessary to maintain a bank account with the designated branch through whom the application is made?
Q.92 Is there any ceiling on the investment under the Portfolio Investment Scheme?

3C. Company Deposits
Q.93 Can NRIs keep deposits with companies in India with repatriation benefits?
Q.94 Do NRIs need permission of Reserve Bank for placing funds in fixed deposits with firms/companies on non-repatriation basis?
Q.95 Are NRIs permitted to invest in Commercial Paper (CP) issued by Indian companies?
 

3D. Sale/Transfer of Shares/Securities
Q.96 Is permission of Reserve Bank required for sale/transfer of Government securities/units?
Q.97 Is permission of Reserve Bank required by NRIs for sale/transfer of shares/debentures of Indian companies to other NRIs?
Q.98 Can NRIs transfer/sell their shares/debentures/bonds held on non-repatriation basis to residents freely?
Q.99 What is the procedure for sale/transfer of shares/debentures/bonds held by NRIs with repatriation benefits?
Q.100 What is the procedure to be followed by NRIs for sale/transfer of shares/debentures to residents by private arrangements?
Q.101 Can shares/debentures be given away as gifts to relatives?
Q.102 Can rupee securities, shares, bonds, debentures be transferred by way of gift to registered charitable trusts/organisations?

 CHAPTER 4. Investment in Immovable Property (Q.103 to Q.119)

 CHAPTER 5.Facilities to Returning Indians (Q. 120 to Q.143)

A. Overseas Assets
Q.120 Are Returning Indians permitted to retain their assets abroad even after return to India?
Q.121 Are they required to obtain any permission from Reserve Bank for holding these assets?
Q.122 Do they enjoy any freedom in regard to utilisation of these overseas assets?
Q.123 Can they bring back the funds to India and hold them with separate account?

B. Resident Foreign Currency (RFC) Accounts Scheme
Q.124 What is the Resident Foreign Currency (RFC) Account Scheme?
Q.125 Is any permission from Reserve Bank required for opening such accounts with authorised dealers?
Q.126 In which currencies can RFC accounts be maintained?
Q.127 What funds can be credited to RFC accounts of Returning Indians?
Q.128 Can income received from their overseas assets in the form of dividends etc., or sale proceeds of such assets be credited to RFC accounts?
Q.129 Can pension received by the account holder from abroad be credited to his RFC account?
Q.130 NRIs returning to India for permanent settlement were granted RIFEE facility. Is this facility still available?
Q.131 Can funds in RFC accounts be remitted abroad?
Q.132 Can funds in RFC accounts be utilised for local payments?
Q.133 Can a Returning Indian desiring to go abroad again for employment, business or vocation transfer his funds in RFC account to NRE/FCNR account?
Q.134 Can persons who have returned to India after a short assignment of less than one year open RFC accounts?
 
C. Import of gold/silver by NRIs
Q.135 Can NRIs bring gold into India?
Q.136 In what form can the gold be brought into India?
Q.137 Are NRIs required to pay customs duty on the gold brought by them into India?
Q.138 How often can a NRI bring gold into India?
Q.139 Is it necessary that the NRI should have stayed abroad at least for a minimum period of six months prior to his return to India for being eligible to bring gold?
Q.140 Can NRIs bring silver into India?
Q.141 What is the rate of duty payable on such import?
Q.142 Can they bring both gold and silver?
Q.143 Can NRIs sell gold/silver imported by them to residents?

CHAPTER 6. Miscellaneous (Q. 144  to Q. 156)

Q. 6

Can accounts be maintained by NRIs with any bank in India?

Ans.

Banks holding authorised dealers' licences (i.e. banks authorised to deal in foreign exchange) or banks specifically authorised in this behalf by Reserve Bank can only maintain accounts in the names of NRIs. Certain co-operative/commercial banks (referred to as authorised banks) have been specifically permitted to maintain accounts of NRIs expressed in rupees even though they are not authorised dealers.

Q.7

Are NRIs permitted to maintain accounts in rupees and in foreign currency?

Ans.

Yes. Accounts can be maintained by NRIs in rupees as well as in foreign currency. Accounts in foreign currencies can, however, be maintained with authorised dealers only.

B.

Rupee Accounts

Q.8

What are the different types of rupee accounts permitted to be maintained?

Ans.

Four types of rupee accounts viz. Non-resident (External) Rupee Accounts (NRE), Non-Resident (Special) Rupee (NRSR) Account, Ordinary Non-resident Rupee Accounts (NRO) and Non-resident (Non-repatriable) Rupee deposit accounts (NRNR) are permitted to be maintained by NRIs.

Q.9

Can NRIs maintain current/savings/fixed deposit rupee accounts with authorised dealers/authorised banks in India?

Ans.

NRO, NRE and NRSR accounts can be maintained in current/savings/fixed deposits form while NRNR account can be only in fixed term deposits.

Q.10

Can proceeds of foreign currency notes/travellers cheques be credited to NRE accounts without any restriction?

Ans.

Authorised dealers have been permitted to credit the proceeds of foreign currency notes/travellers cheques brought by the account holder from abroad during his visit to India provided they are tendered in person. Where the amount of foreign currency notes tendered exceeds U.S.$ 5000/- or its equivalent or the total amount of currency notes and travellers cheques tendered for credit to NRE accounts exceeds U.S.$ 10,000 or its equivalent, it should have been declared to the Customs on the Currency Declaration Form (CDF) at the time of the account holder's arrival into India. Further, in the case of travellers cheques, they should be presented by the account holder himself and discharged by him in the presence of the official of the concerned bank.

Q.11

Can NRE accounts be opened by the power of attorney holder in India on behalf of a non-resident?

Ans.

No.

Q.12

Can resident Power of Attorney holder operate on the NRE accounts?

Ans.

Yes, but only for local payments to be made on behalf of the account holder. In cases where the account holder or a bank designated by him has been granted permission by Reserve Bank to make investments in India, the Power of Attorney holder (POA) is permitted to operate the account to facilitate such investments. POA holders cannot, however, make gifts from NRE accounts.

Q.13

Can Power of Attorney holder credit proceeds of foreign currency notes/bank notes and travellers cheques to the NRE accounts?

Ans.

No.

Q.14

What is the distinction among NRE account NRSR account and NRO account?

Ans.

Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRSR and NRO account cannot be remitted abroad but have to be used only for local payments in rupees. Consequently, funds remitted from abroad or local funds which can otherwise be remitted abroad to the account holder can only be credited to NRE accounts. Funds due to the non-resident accountholder which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts. The accountholders can freely transfer funds from NRO/NRE/FCNR accounts to NRSR account but transfer of funds from NRSR account to other accounts of NRI is not permissible irrespective of the source of funds.

Q.15

Can NRO/NRE/NRSR accounts be maintained by NRIs jointly with residents?

Ans.

NRO & NRSR accounts can be held jointly with residents. However, NRE accounts cannot be held jointly with residents.

Q.16

What is the rate of interest payable on such accounts?

Ans.

Banks in India have been given freedom to decide interest rates on all non-resident rupee accounts. However, the rates of interest on deposits are subject to change as per the directives issued by Reserve Bank (Department of Banking Operations and Development) from time to time.

Q.17

Are debits and credits to NRO accounts allowed freely by banks maintaining the accounts?

Ans.

Yes. Debits for local payments are allowed freely. Funds representing legitimate dues of the account holder or proceeds of remittances received from abroad through banking channels are permitted to be credited freely. Debits to the accounts for the purpose of investment in India and credits representing sale proceeds of investments are allowed subject to the accountholder giving an undertaking at the time of opening the account to the effect that such investments/disinvestments would be covered either by the general or special permission of Reserve Bank.

Q.18

What are the admissible debits and credits to NRE accounts?

Ans.

Debits for local payments/investments are allowed freely. Credits to an account, of funds emanating from a local source would be permissible only if the funds are of a repatriable nature i.e. funds which are eligible to be remitted abroad.

Q.19

Can funds in NRE/NRO/NRSR accounts be repatriated outside India?

Ans.

Funds held in NRE accounts can be repatriated abroad freely. Funds held in NRO accounts which would generally be from local source cannot be repatriated outside India. Funds held in NRSR account also cannot be repatriated. (Please also see Answers to Questions 61 and 62).

Q.20

Can funds in NRE/NRO/NRSR accounts be utilised for payment of air fare to/from and other travel related expenses in India of the account holder and/or his dependents?

Ans.

Yes. Banks maintaining such accounts have been authorised to permit such payments. Airlines/shipping companies and their agents have also been permitted to accept payments in rupees.

Q.21

Are temporary overdrawings permitted in NRO Savings Bank accounts?

Ans.

Yes. Authorised dealers may allow such overdrawings up to Rs. 20,000/- subject to the condition that the overdrawings together with the interest payable thereon are cleared within a period of two weeks.

Q.22

Are NRO/NRE/NRNR account holders eligible for loans/overdrafts against their fixed deposits?

Ans.

Yes, except for the purpose of relending, carrying on agricultural/plantation activities or for investment in real estate business. Loans against NRE fixed deposits can, however, be utilised for investments in India on non-repatriation basis, in certain specified areas and for acquisition of flats/houses subject to prescribed conditions.

Q.23

What are the rates of interest charged on such loans?

Ans.

The rate of interest on such loans will be as per the directive issued by Reserve Bank (Department Banking Operations and Development) from time to time.

Q.24

Can loans raised against NRE fixed deposits be repaid out of funds in NRO/NRSR accounts?

Ans.

The loans raised against NRE deposits can be repaid out of funds held in NRO/NRSR accounts but in such cases, the interest would be charged at commercial rate in force from time to time.

Q.25.

Can a third party in India take loans against the NRO fixed deposit accounts of NRI?

Ans.

Yes. Subject to certain conditions.

Q.26

Is nomination allowed in NRO/NRE/NRSR accounts?

Ans.

Yes.

Q.27

Is repatriation of funds belonging to non-resident nominees permitted?

Ans.

Funds held in NRO/NRSR accounts will be allowed to be credited to the non-resident nominee's NRO/NRSR account only and no repatriation is permitted. Remittance of funds to the non-resident nominee from the deceased person's NRE account will be permitted by authorised dealers.

Q.28

Is transfer of funds between NRE accounts maintained by two different account holders permitted?

Ans.

Yes. Authorised dealers can permit transfer of funds from the NRE account of one person to the NRE account of another person. Authorised dealers can transfer funds held with them in NRE account to the account of same person held with another authorised dealer. Funds held in NRE account can also be transferred to other authorised dealer for the purpose of opening NRE account in the name of the same person provided a certificate confirming the NRE status of the account from which funds are transferred is produced. Transfer of funds by way of gift can be permitted by authorised dealer after obtaining an undertaking from the transferee/transferee's bank that gift tax rules/regulations have been complied with.

Q.29

At what rates are remittances to India by NRIs for credit to NRE/NRO/NRNR/NRSR accounts converted into rupees?

Ans.

Remittances for credit to rupee accounts (i.e. NRE/NRO/NRNR/NRSR accounts) maintained by NRIs are converted at the market rate.

Q.30

Is there any scheme under which non-residents other than NRIs can also keep rupee deposits with banks in India?

Ans.

Yes, NRIs and other non-residents can maintain NRO rupee accounts as well as keep deposits with banks in India under NRNR Rupee Deposit Scheme.

Q.31

How should an account under the Non-Resident Non-repatriable (NRNR) Rupee Deposit Scheme be opened?

Ans.

Such an account can be opened with an authorised dealer in India by remitting funds from abroad in any convertible foreign currency. Under the NRNR Scheme, deposits designated in rupees can be kept for periods ranging from 6 months to 3 years. NRIs can also open such accounts by transferring funds from their existing NRE/FCNR accounts. No penal interest is chargeable for premature withdrawal of NRE/FCNR deposits for the purpose of making investment in the scheme if the deposit is to be kept with the same authorised dealer.

Q.32

Can the principal or the interest accrued on NRNR deposits be repatriated outside India at any time?

Ans.

The principal amount of the deposit is not eligible for repatriation. Interest earned up to 30th September 1994 is also not eligible for repatriation. Interest earned for the period beginning 1st October 1994 is, however, eligible for repatriation or can be utilised for opening fresh NRE/FCNR deposits, or can be credited to existing NRE accounts.

Q.33

Can the principal together with the interest accrued on NRNR deposits be renewed, on maturity?

Ans.

Only the principal amount of deposit could be renewed under the scheme upto 30th September 1994. However, since interest accrued for the period from 1st October 1994 is repatriable, the principal amount together with interest accrued for the period from 1st October 1994 can be renewed under the scheme.

Q.34

Can loans/overdrafts be availed of against the security of NRNR deposits?

Ans Yes.

Authorised dealers are permitted to grant loans/overdrafts for purposes other than investment.

Q.35

What is the status of NRO/NRSR/NRE accounts on the return of the account holder to India?

Ans.

Banks have been advised to redesignate such accounts as resident accounts on return of the account holder to India.

Q.36

Does the account holder suffer any loss of interest on such redesignation of accounts?

Ans.

No Banks have been advised to continue to pay interest at the contracted rate till the maturity of the deposit if the deposit is held for the full term even after conversion into resident rupee account.

C.

Foreign Currency Accounts

Q.37

Can accounts be maintained by NRIs/OCBs in foreign currencies?

Ans.

Yes. Accounts in foreign currencies (FCNR accounts) can be maintained by NRIs/OCBs with authorised dealers in India.

Q.38

What are the foreign currencies in which such accounts can be maintained?

Ans.

FCNR Accounts can be maintained in Pound Sterling, U.S. Dollar, Deutsche Mark (upto December 2001), Euro and Japanese Yen.

Q.39

Are FCNR accounts permitted to be maintained in the form of current/savings accounts?

Ans.

No. FCNR accounts can be maintained only in the form of 'term deposits', i.e. a deposit kept for fixed periods ranging from 6 months to 3 years.

Q.40

Is premature withdrawal of the FCNR term deposit allowed?

Ans.

Yes. However, this is subject to the levy of a penalty.

Q.41

What is the penalty for premature withdrawal of a FCNR deposit?

Ans.

Interest in such cases is paid at one per cent below the interest rate payable for the period for which the deposit has actually run. Interest on deposits is, however, payable only if they are kept for a minimum period of six months. Incidentally, these matters are governed by the instructions/directives issued by Reserve Bank (Department of Banking Operations and Development) from time to time.

Q.42

If a FCNR deposit of 6 months maturity is withdrawn prematurely, would any interest be payable?

Ans.

No. While the premature withdrawal would be allowed, no interest would be payable. For such premature withdrawals the bank may levy penalty as per their discretion.

Q.43

Are the interest rates on FCNR deposits liable for periodical revision?

Ans.

Yes. The Banks have been permitted to offer interest on such deposits at rates not in excess of LIBOR minus 25 basis points in respect of the deposits of 6 months and above but less than one year and LIBOR + 50 basis points in respect of deposits of maturity of one year and above. (LIBOR rate prevailing on the last working day of the previous week for the relevant maturity and currency.) Subject to this guideline, banks can offer either fixed or floating rate of interest on such deposits. [The rates of interest are subject to change in accordance with the directives issued by Reserve Bank (Department of Banking Operations and Development) from time to time.]

Q.44

What about debits to FCNR accounts for local payments?

Ans.

Debits for local payments in rupees are allowed freely. As regards debits for investments in India, please see Chapters III and IV.

Q.45

Are funds in FCNR accounts freely repatriable abroad?

Ans.

Yes. Authorised dealers maintaining these accounts would allow repatriation abroad of these funds.

Q.46

Can FCNR deposits be held jointly with residents?

Ans.

No.

Q.47

Is nomination allowed in FCNR accounts?

Ans.

Yes.

Q.48

Is repatriation of FCNR funds to non-resident nominees permitted?

Ans.

Yes. (Also see answer to Q.27 for repatriation of funds in NRE account)

Q.49

What is the status of FCNR accounts on the return of the account holder to India?

Ans.

Banks would treat the deposits held in FCNR accounts as resident deposits but would continue to pay interest at the contracted rate till maturity of the deposit.

Q.50

Can NRIs invest their funds in Government securities or Units of Unit Trust of India (UTI)?

Ans.

Yes. NRIs are freely permitted to invest their funds in Government securities or Units of UTI through authorised dealers. Units can also be purchased directly from UTI.

Q.51

Can NRIs make investments in National Savings Certificates issued by Post Offices in India?

Ans.

Yes. Investments in National Savings Certificates can be made by NRIs subject to the terms and conditions applicable to the sale/issue of such certificates. However, NRIs are not permitted to invest in bearer securities like Indira Vikas Patra/Kisan Vikas Patra.

Q.52

Can Government securities/units be freely transferred or sold?

Ans.

Yes, provided the transfers/sales are arranged through an authorised dealer. Units can, however, be repurchased directly by UTI.

Q.53

Are sale/maturity proceeds of Government securities/Units/National Savings Certificates allowed to be repatriated abroad?

Ans.

If such securities were purchased out of funds remitted from abroad or out of NRE/FCNR accounts, sale/maturity proceeds can be repatriated. Sale/maturity proceeds of securities purchased out of funds in NRO accounts can only be credited to NRO accounts and cannot be remitted abroad. Interest earned during the financial year 1994-95 and onwards can, however, be remitted to the extent permitted by Reserve Bank (See Answers to Questions 61 and 62).

B.

Company Shares/Debentures

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 exchange/s in India. These facilities are granted both on repatriation and non-repatriation basis.

B.1

Direct Investment without Repatriation benefits

Q.54

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

Q.55

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 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 house) or chit fund or is not a Nidhi company.

Q.56

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.

Q.57

Can NRI/OCBs make investments in domestic public/private sector Mutual Funds or Money Market Mutual Funds floated by commercial banks and public/private sector financial institutions on non-repatriation basis?

Ans.

Yes.

Q.58

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

Ans.

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

Q.59

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

Ans.

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.

Q.60

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?

Ans.

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 sale proceeds of the security.

Q.61

Is income/interest earned on investments/deposits held in India by NRIs on non-repatriation basis allowed to be repatriated?

Ans.

Yes. Income/interest accruing during the financial year 1994-95 and onwards on bank deposits and investments held by NRIs with non-repatriation benefits will be eligible for repatriation as under:

(a)

Up to U.S. $ 1,000 or its equivalent in full and one-third of the balance income earned during the financial year 1994-95;

(b)

Up to U.S. $ 1,000 or its equivalent in full and two-third of the balance income earned during the financial year 1995-96;

(c)

The entire income earned during the financial year 1996-97 and onwards.

Note: The investment/principal amount of deposits made/held on non-repatriation basis (will, however, not be allowed to be repatriated abroad. Further funds held in NRSR accounts and/or interest/income accrued on funds held in these accounts will not be be allowed to be repatriated abroad.

Q.62

What is the procedure to be followed for seeking repatriation in such cases?

Ans.

NRIs should designate a branch of an authorised dealer through whom the remittance of income is to be made and make an application in form RCI to the designated branch giving details of incomes earned during the previous financial year alongwith a Chartered Accountant's Certificate. The designated branch will allow the remittance of net amount (i.e. after payment of tax) or credit it to NRE/FCNR account of the applicant.

B.2

Direct Investment with Repatriation benefits

Q.63

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

Ans.

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.64

What is 24% Scheme?

Ans.

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.65

What is 51% Scheme?

Ans.

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

a)

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.

b)

The shares of the company are not listed on any stock exchange, and

c)

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.66

Is remittance of interest/dividend to NRI investors freely allowed under the 24%/51% Scheme?

Ans.

Yes. There is no ceiling or restriction on the amount of remittable dividend. Remittance of interest/dividend to NRI investors will be allowed by authorised dealers under the powers delegated to them.

Q.67

What are the specified industries under the 100% Scheme?

Ans.

Under 100% Scheme, NRIs are permitted to invest in high priority industries listed in Annexure III to the Statement on Industrial Policy dated 24th July 1991 of the Government of India up to 100% of the new issue.

Q.68

Is dividend/interest earned in respect of investments made under the 100% Scheme freely remittable to the NRIs abroad?

Ans.

Dividend/interest can be remitted freely except in the case of consumer goods industries where the outflow on account of dividend is required to be balanced by export earnings of the company either in the year of declaration of dividend or in the years prior to the declaration of dividend. This requirement is enforced for a period of seven years from the commencement of commercial production.

Q.69

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

Ans.

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.

Q.70

Besides the 24%, 51% and 100% Schemes is there any other scheme for investment by NRIs in the equity of Indian companies?

Ans.

Yes. NRIs are permitted to undertake revival of sick industrial units by making bulk investment in them to the extent of 100 per cent either by way of purchase of existing equity shares or in the form of subscription to new equity issues.

Q.71

Is the capital brought into India for revival of a sick industrial unit allowed to be repatriated?

Ans.

Yes.

Q.72

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.

Q.73

Under the existing Industrial Policy, investment by foreign collaborators upto 50%/51%/74% of the equity is allowed by Reserve Bank on repatriation basis in certain high priority industries. Can NRIs take up the balance 50%/49%/26% equity in such cases on repatriation basis?

Ans.

Yes.

Q.74

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 following 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.

Q.75

What is the procedure for obtaining Reserve Bank permission in this regard?

Ans.

Application for the purpose should be made by the concerned Indian company to the Central Office of Reserve Bank in Mumbai [in Form ISD(R)].

Q.76

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 lock-in-period of three years. (This facility is, however, not available to individual NRIs.) Annual dividend/interest on equity shares/debentures can, however, be freely remitted subject to payment of tax.

Q.77

Are investments in Air Taxi operations permitted to be made by NRIs/OCBs?

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. Reserve Bank has granted general permission to Indian companies engaged in Air-Taxi operations to issue shares subject to certain conditions. The concerned company should file a declaration in form ISD(R) within 30 days from date of issue to Reserve Bank.

Q.78

Can NRIs invest in non-convertible debentures on repatriation basis?

Ans.

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

Q.79

What is the procedure to be followed for making investment in the schemes of domestic Mutual Funds with repatriation benefits?

Ans.

Reserve Bank has granted general permission to domestic mutual funds to issue units/similar instruments to NRIs/OCBs on both repatriation basis and non-repatriation basis.

Q.80

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.

Q.81

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.

Q.82

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.55 & 56)

Q.83

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.

Q.84

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.

Q.85

Can NRIs obtain loans abroad against the collateral of shares/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.

Q.86

Can sale proceeds of the shares/debentures be remitted abroad for liquidation of outstandings against such loans/overdrafts?

Ans.

Yes, subject to payment of Income tax, Capital Gains tax etc. payable, if any.

B.3

Portfolio Investment Scheme

Q.87

What is the Portfolio Investment Scheme?

Ans.

Under this scheme, NRIs/OCBs are permitted to acquire shares/debentures of Indian companies or units of domestic Mutual Funds through the stock exchange/s in India.

Q.88

What is the procedure for making applications?

Ans.

The application is to be submitted to Reserve Bank through a designated branch of a bank in India in one of the prescribed forms, i.e. NRC/NRI/RPC/RPI. Reserve Bank issues general permission for a period of 5 years which can be renewed further by authorised dealer concerned for a period of 5 years at a time.

Q.89

What is a designated branch?

Ans.

Reserve Bank has authorised a few branches of each bank to conduct the business under Portfolio Investment Scheme on behalf of NRIs/OCBs. These branches are the main branches of major commercial banks located close to the stock exchange/s. NRIs/OCBs will have to route their applications through any of the designated bank branches who have authorisation from Reserve Bank.

Q.90

Whether NRI/OCB can apply through more than one designated branch?

Ans.

No. Each NRI/OCB has to select one branch for this purpose for investment on repatriation/non-repatriation basis.

Q.91

Is it necessary to maintain a bank account with the designated branch through whom the application is made?

Ans.

It is advisable to maintain a bank account with the designated branch for administrative convenience.

Q.92

Is there any ceiling on the investment under the Portfolio Investment Scheme?

Ans.

There is an overall ceiling of 10% of paid-up equity share capital of the company/paid-up value of each series of convertible debentures for purchase by NRIs/OCBs. The overall ceiling can be raised to 30% if the company concerned passes a special resolution to that effect in its general body meeting and a Board resolution. Individually, NRIs/OCBs can make investment upto 5% of the paid-up equity share capital/each series of convertible debentures. However, there is no ceiling for investment in domestic Mutual Funds.

C.

Company Deposits

Q.93

Can NRIs keep deposits with companies in India with repatriation benefits?

Ans.

General permission to Indian companies (including non-banking finance companies registered with Reserve Bank) has been granted to accept deposits from NRIs/PIOs/OCBs with repatriation benefits subject to certain conditions.

Q.94

Do NRIs need permission of Reserve Bank for placing funds in fixed deposits with firms/companies on non-repatriation basis?

Ans.

No. General permission has been granted to proprietorship concern or a firm in India to accept deposits from NRIs and to Indian companies (including non-banking finance companies registered with Reserve Bank) to accept deposits from NRIs/OCBs on non-repatriation basis subject to certain conditions.

Q.95

Are NRIs permitted to invest in Commercial Paper (CP) issued by Indian companies?

Ans.

Yes. General permission has been granted by Reserve Bank to Indian companies to issue CP to NRI individuals subject to the conditions that the amount invested will not be repatriated outside India and the CP will not be transferable.

D.

Sale/Transfer of Shares/Securities

Q.96

Is permission of Reserve Bank required for sale/transfer of Government securities/units?

Ans.

No. Authorised dealers have been permitted to undertake sale of Government securities/units on behalf of NRIs without prior approval of Reserve Bank. Sale/maturity proceeds can be remitted abroad if the original investment was made out of funds remitted from abroad or funds in NRE/FCNR accounts. Otherwise, they will have to be credited to NRO account of the holder.

Q.97

Is permission of Reserve Bank required by NRIs for sale/transfer of shares/debentures of Indian companies to other NRIs?

Ans.

No. Transfer of shares/debentures of Indian companies by NRIs to other non-residents does not require permission of Reserve Bank. However, the transferee NRI would need permission for purchase of such shares for which an application is required to be made to Reserve Bank in form FNC 7.

Q.98

Can NRIs transfer/sell their shares/debentures/bonds held on non-repatriation basis to residents freely?

Ans.

Yes. General exemption has been granted by Reserve Bank for transfer/sale of shares/debentures/bonds by NRIs/OCBs through stock exchanges if such transfers are made in favour of an Indian citizen or a person of Indian origin or a company incorporated in India and sale proceeds thereof are credited to NRO account.

Q.99

What is the procedure for sale/transfer of shares/debentures/bonds held by NRIs with repatriation benefits?

Ans.

In the case of shares/debentures/bonds acquired by NRIs through stock exchanges under the Portfolio Investment Scheme, general exemption has been granted for transfer through stock exchanges provided the sale is arranged through the same designated branch through whom they were purchased. General exemption has also been granted for sale/transfer of shares/bonds/debentures of Indian companies by NRIs/PIOs/OCBs through stock exchanges in cases where such transfers are made in favour of Indian citizens or Persons of Indian Origin resident in India or in favour of a company or body corporate incorporated under any law in force in India subject to certain conditions.

Q.100  

What is the procedure to be followed by NRIs for sale/transfer of shares/debentures to residents by private arrangements?

Ans.

NRIs are required to submit application in form TS 1 to Reserve Bank for sale of shares/debentures by private arrangements.

Q.101

Can shares/debentures be given away as gifts to relatives?

Ans.

Yes. Reserve Bank has granted general permission to NRIs to transfer, by way of gift, shares, bonds and debentures of Indian companies held by them with Reserve Bank's general/special permission to their resident close relative/s.

Q.102

Can rupee securities, shares, bonds, debentures be transferred by way of gift to registered charitable trusts/organisations?

Ans.

Yes. General permission has been granted by Reserve Bank to NRIs to transfer by way of gift any rupee security, share, bond or a debenture of a company registered in India held by them to a registered charitable trust/organisation subject to the condition that provisions of any other laws, as applicable, including Foreign Contribution (Regulation) Act, 1976 are duly complied with.