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INVESTMENT

FACILITIES FOR NRIs AND PIOs

Non-Resident Indians

An Indian Citizen who stays abroad for employment/carrying on business or vocation 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. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs) for the purpose of certain facilities.

Overseas Corporate Bodies

Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of atleast 60% by individuals of Indian nationality or origin resident outside India as also overseas trusts in which atleast 60% of the beneficial interest is irrevocably held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs so long as the ownership/beneficial interest held in them by NRIs continues to be atleast 60%.

Various facilities available to NRIs/OCBs

I. Bank Accounts and Deposits

a) Non-Resident (External) Rupee (NRE) Accounts (Principal / Interest Repatriable)

  • Savings- The interest rates on NRE Savings deposits shall be at the rate applicable to domestic savings deposits. Currently the interest rate is 3.5%.

  • Term deposits -For 1 year to 3 years, the interest rates on fresh repatriable Non-Resident (External) Rupee (NRE) Term deposits should not exceed the LIBOR/SWAP rates, as on the last working day of the previous month, for US dollar of corresponding maturity plus 50 basis points.

The interest rates as determined above for three year deposits should also be applicable in case the maturity period exceeds three years.

The changes in interest rates will also apply to NRE deposits renewed after their present maturity period.

b) FCNR (B) (Principal/Interest Repatriable)

Deposits of funds in the account may be accepted in such permissible currencies as may be designated by the Reserve Bank from time to time.

  • Presently the term deposit can be placed with ADs in India in 6 specific foreign currencies (US Dollar, Pound Sterling, EURO, Japanese Yen, Australian Dollar and Canadian Dollar).
  • Rate of Interest - Fixed or floating within the ceiling rate of LIBOR/SWAP rates for the respective currency/corresponding term minus 25 basis points.
  • Maturity of deposits: 1-5 years.

c) NRO Accounts (Current earnings repatriable)

Savings - Normally operated for crediting rupee earnings / income such as dividends, interest. Currently the interest rate is 3.5 per cent.

Term Deposits - Banks are free to determine interest rates.

d) Repatriation from NRO balances

Authorised Dealers can allow remittance/s upto USD 1 million per financial year (April-March) for bonafide purposes, from balances in NRO accounts subject to payment of applicable taxes. The limit of USD 1 million per financial year includes sale proceeds of immovable properties held by NRIs/PIO.

II. Other Investments on repatriation basis

  • Government dated securities/treasury bills.
  • Units of domestic mutual funds.
  • Bonds issued by a public sector undertaking (PSU) in India.
  • Non-convertible debentures of a company incorporated in India.
  • Shares in Public Sector Enterprises being dis-invested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.
  • Shares and convertible debentures of Indian companies under FDI scheme (including automatic route & FIPB).
  • Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme.
  • Perpetual debt instruments and debt capital instruments issued by banks in India.

III. Other Investments on non-repatriation basis

  • Government dated securities (other than bearer securities)/treasury bills.
  • Units of domestic mutual funds.
  • Units of Money Market Mutual Funds in India.
  • Non-convertible debentures of a company incorporated in India.
  • The capital of a firm or proprietary concern in India, not engaged in any agricultural or plantation activity or real estate business.
  • Deposits with a company registered under the Companies Act, 1956 including NBFC registered with RBI, or a body corporate created under an Act of Parliament or State Legislature, a proprietorship concern or a firm out of rupee funds which do not represent inward remittances or transfer from NRE/FCNR(B) Accounts into the NRO Account.
  • Commercial Paper issued by an Indian company.
  • Shares and convertible debentures of Indian companies other than under Portfolio Investment Scheme.

 

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