RBI relaxes NRI financial transactions

MUMBAI, MARCH 30: The Reserve Bank of India (RBI) has relaxed norms for non-resident Indians (NRIs) and persons of Indian origin (PIOs) t...

MUMBAI, MARCH 30: The Reserve Bank of India (RBI) has relaxed norms for non-resident Indians (NRIs) and persons of Indian origin (PIOs) that will enable them to undertake financial transactions with the same ease as residents. The central bank has granted permission to NRIs/PIOs to open bank accounts in India on par with the rupee accounts maintained by residents.

They will now be permitted to open non-resident (special) rupee accounts with commercial banks in the country and enjoy the same facilities and face similar restrictions as are applicable to the accounts held by residents with regard to repatriation of funds held in these accounts and interest earned on them. This scheme will become effective from April 15. The existing facilities for NRIs/PIOs to maintain and operate non-resident (ordinary) account (NRO), non-resident (external) (NRE) and foreign currency non-resident (FCNR) accounts will continue with no change in norms regarding repatriation facilities.

The RBI has also granted generalpermission to NRIs and overseas corporate bodies (OCBs) to invest in air taxi operations, subject to approval of the Director-General of Civil Aviation. Such an investment will be allowed on a non-repatriation basis.

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The RBI has also allowed resident individuals and partnership or 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 the country on a non-repatriation basis. The rate of interest on such loans should not exceed the bank rate plus two percentage points, said the central bank.

Further, NRIs/PIOs have been permitted to gift shares held by them in Indian companies. PIOs have been allowed to gift immovable property held by them in India to registered charitable trusts/organisations subject to compliance with the applicable rules/regulations including provisions of the foreign contribution regulation act by the concerned trust or organisation. All domestic mutual funds have beenpermitted to issue units to NRIs/PIOs/OCBs on both repatriation and non-repatriation basis.

These entities can now place deposits with Indian firms on a non-repatriation basis and with domestic companies including non-banking financial companies (NBFCs) on both repatriation and non-repatriation basis. They can also acquire shares under the direct investment schemes on stock exchanges in India. Also, permission has been granted to invest in government securities and treasury bills, while allowing investment in shares and debentures under the portfolio scheme.

The release stated that with the new measures, NRIs/PIOs will not have to seek specific permission from the RBI for a whole variety of approved financial/investment transactions. “This should considerably reduce paper work and time taken for undertaking such transactions,” the release added. After the easing of norms, the areas where these entities will not enjoy the same facilities as domestic residents will primarily relate to investment by themin real estate, agriculture and plantation business.

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