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NRI INVESTMENTS

Definition of NRI

An Indian Citizen or a person of Indian origin who stays abroad for employment / carrying on business or vacation 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 Government and Public Sector Undertakings on temporary assignments are also treated as non-resident).

Under the Foreign Exchange Regulation Act of 1973, Non-Resident Indians are:

1. Indian citizens who stay abroad for employment or carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad.

2. Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources .

3. Government servants deputed abroad on assignments with foreign Governments or regional / international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP).

4. Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.

Buy or Sell Procedures  

A foreign citizen of Indian origin, under the general permission available may purchase residential / commercial property in India out of funds remitted to India through normal banking channel or funds held in his NRE / FCNR (B) / NRO account. No consideration shall be paid outside India and does not have to obtain RBI’s permission for purchasing and selling other than agricultural / plantation land and farm house for bonafide purposes, provided the purchase is met through foreign exchange. In such cases, a declaration has to be submitted to RBI within 90 days of the purchase. Other than this there is no variation in these procedures for NRIs.

Property Investment

Real Estate Hyderabad

In its road to development, Hyderabad has stretched its municipal limits towards north, northwest and west. The construction of the international airport, the outer ring road and the elevated expressway corridor has pulled the city on its southern limits as well. The residential localities in the heart of the city are giving way to commercial and retail spaces.

Corporates prefer to move into ready-to-occupy properties before moving into a customized facility, as they need some incubation time before expanding their operations.

Hyderabad has shared 60% of the action in the commercial property market with Chennai and Bangalore in the last 2 years, with 2.7 million sq.ft leased out in 2005. The nature of development is shifting from speculative to demand based. Cyberabad in west hyderabad covers 51.70 sq.km, and is host to Infosys, Microsoft, Google, Wipro and Dell amongst others.

Cushman and Wakefield has forecast that Hyderabad’s growing market share will erode the NCR and mumbai market share of commercial property. By the end of 2007, Hyderabad will be having 12% of the property market in India, second only to Bangalore.

Taller structures will be now be permitted in Banjara Hills, Jubilee Hills and Nandagiri Hills. The restriction on larger than 10 metre structures has been lifted and developers can build upto 3 floors plus stilt and cellar. Builders are upbeat that this would have investors queue up for the flats which range between Rs. 50 to Rs. 75 lakh. The  government is also considering a proposal to increase the coverage area for smaller plots below 1000 sq.mts to 40%.

As for the residential sector, supply is able to meet the demand, and the western suburbs are undergoing a major transformation. Two integrated townships along the outer ring road at Tellapur and Maheswaram village on 600 acres each under the public-private partnership model will be constructed. In the southern suburbs, most of the development is charecterised by residential layouts and plots.

NRI Real Estate Trends

There has been a surge of Indians returning home, as MNCs find NRIs an attractive resource pool. Among others, Motorola has a rewarding return to India program for its returnees for the Hyderabad centre.

For those planning to return to India, and settle in Hyderabad, real estate developers have not been found wanting. Omega Shelters is working on a niche project, offering villas for 12 crores in Kompally. The Hyderabad residential property market has a choice of the best luxury apartments that Indian real estate can offer.

Developers are setting new benchmarks, and are confident that if they can match up to the tastes of NRIs, they would be able to face up to the competition posed by international developers setting up operations here through joint ventures.

A growing number of Indian developers are naturally targeting the affluent NRI markets, especially in the Gulf, the UK, the US, Singapore and Hong Kong. NRIs are eager to invest in residential properties here, and earn handsome rentals on them.

Hitec City, Kondapur, Guchibowli, Miyapur, Kukatpalli, Madhapur, Jubilee Hills, Banjara Hills, Somajiguda, and Srinagar Colony are dotted with well- appointed, richly furnished apartments, villas, bungalows for returning Indians. Rolling Meadows is a boutique project coming up at Kokapet, Manchirevula.

 
NRI Account Type 

As a Non Resident Indian, there are a number of options at your disposal, when it comes to opening a bank account in India.
This section covers the following topics:

  • Non-Resident External (NRE) Accounts
  • Foreign Currency Non-Resident (Banks) (FCNR (B)) Deposits
  • Non-Resident Ordinary (NRO) Accounts
  • Smart International Accounts (SIA)

Non-Resident External (NRE) Accounts:

You may open NRE savings accounts, NRE current accounts and NRE term deposits ranging from 1 to 3 years with the money you earn outside India. These accounts are maintained in Indian rupees and are permitted to send the money outside India at any time and without any restrictions on the same.

This account can be held jointly with another NRI. You may give a resident Indian the Power of Attorney to do select operations on the account. The funds in the account are freely reparable, i.e. there is no restriction on sending the money back out of the country. The interest earned on NRE bank deposits is not taxable.

Foreign Currency Non-Resident (Banks) (FCNR (B)) Deposits:

Foreign Currency Non-Resident (Banks) (FCNR (B)) Deposits are term deposits that you may hold with the bank in the major currencies, i.e. US Dollars, Pound, Sterling, Euro, or Japanese Yen. The deposits range from over 1 year to 3 years for USD and GBP and up to 2 years for EURO & Japanese Yen.

The funds with which this account can be opened is external funds, and hence, it is very much like the NRE account in terms of reparability, joint operations and power of attorney.

Non-Resident Ordinary (NRO) Accounts:

Non-Resident Ordinary (NRO) Accounts are ideal for your local money earned in India. If you earn rent, dividends, or want to credit proceeds of property sold, inheritance, etc., you will need to have this account.

You may also credit funds from abroad into this account. This account can be held jointly with your resident relatives for convenience. You may open savings accounts, current accounts and term deposits.

Although the funds in this account may be local, there are certain repatriation benefits allowed even on NRO accounts.

The documents required to be produced for effecting remittances are:

  • Account holder’s Letter instructing the remittance
  • Copy of document/s proving the value of proceeds credited to the NRO account is current income
  • Chartered accountant’s certificate in the format prescribed by IT authorities
  • Cheque or debit authority if the same is not contained in the letter in item

Smart International Accounts (SIA):

This is a facility where the bank gives you an overdraft against the security of the term deposits held by you. We simply offer you an overdraft of 90% of any of the above Non-Resident deposits or your NRO savings account for you to be able to overdraw to meet your local needs. You have the flexibility to repay using both local as well as external funds. The overdraft is only available for local use.

Documents required to prove Non-Resident status / Indian Origin:

In order to start an NRI relationship with the bank, you will need to produce the following documents that will evidence proof of your Non-Resident status:

  • Passport with a valid visa
  • Date of exit from India, and date of last entry into India (to establish you have been out for at least 6 months) stamped on passport
  • Completed NRE / NRO account opening form.
  • Photograph (signed across the face of it)
  • Letter from employer / contract (proof of overseas employment)
  • Letter of rejoining employer / next contract (proof of continuation of NRI status)

If you are a PIO, any of your parents, or any of your grandparents at any time were a permanent citizen of undivided India. If you are of Non-Indian origin or parentage, and are married to a PIO, an NRI, or an Indian citizen, you are still deemed to be a PIO, and can avail of all facilities available to NRIs.

The following can be accepted as “Proof of Indian Origin”:

  • Indian passport
  • Foreign passport with place of birth in India-school / college / university leaving certificate or mark sheet
  • The above may have to be supported by any one of the following:
    • Certification from the Indian Embassy that the applicant is of Indian origin
    • Ration card, voter ID or PAN card
    • In the case of spouse the marriage certificate with supporting evidence of the maiden name
  • Foreign passport with place of birth outside India or not showing a place of birth, this will have to be supported by any one of the following:
    • Birth certificate of parents / grandparents substantiating evidence of the relationship
    • School / college / university leaving certificate or mark sheets of the account holder / parents or grandparents with supporting evidence of the relationship
    • Passport of either parents or grandparents, which indicate that they were Indian citizens with supporting evidence of the relationship
    • Certification from the Indian Embassy that the applicant or either of his parents or grandparents are of Indian origin with supporting evidence of the relationship
    • Ration card, voter ID or PAN card of either self or parents / grandparents with supporting evidence of the relationship
    • Old Indian passport
    • PIO card
    • Marriage certificate with supporting evidence of the maiden Indian name substantiated by any of the above documents.
    • The NRI representative / officer accepting the application form from the customer must provide a certification that states “NRI Status Verified” together with the relevant copies of any of the above documents to prove PIO

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