Q.1 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.
Q. 2 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
Q. 3 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. 4 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.
Q.5 Can Overseas Corporate Bodies make similar investments in mutual funds on non-repatriation basis?
Ans. OCBs can make such investments only in domestic public/ private sector Mutual Funds. They can also make investments in Money Market Mutual Funds.
Q.6 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. 7 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. 8 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 suchsecurities?
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 income or sale proceeds of the security.
Q. 9 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:
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;
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;
The entire income earned during the financial year 1996-97 and onwards.
The entire income earned during the financial year 1997-98 and onwards.
Note : The investment/principal amount of deposits made/held on non-repatriation basis will, however, not be allowed to be repatriated abroad.
Q.10 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.
Direct Investment with Repatriation Benefits
Q.1 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/40% scheme/100% scheme. They can also invest in the schemes of domestic Mutual Funds floated by public/private sector institutions/companies and bonds issued by public sector undertakings, Non-resident investors are not required to apply for permission to invest but the company concerned will have to obtain permission from Reserve Bank.
Q.2 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 by Reserve Bank to issue shares/debentures to NRIs with repatriation benefits to the extent of 24% of the new issue.
Q.3 What is 40% Scheme?
Ans. Under the 40% Scheme, Indian companies engaged or proposing to engage in the following activities are allowed by Reserve Bank to issue shares/debentures to NRIs with repatriation benefits to the extent of 40% of the new issue.
Industrial and Manufacturing units
Hotels with 3, 4 or 5 star category
Hospitals and diagnostic centres
Shipping companies
Development of computer software
Oil exploration services
Q.4 Is remittance of interest/dividend to NRI investors freely allowed under the 24% /40% 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 posers delegated to them.
Q. 5 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. 6 Is dividend/interest earned in respect of investment 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.
[Source: Reserve Bank of India]
