INVESTMENT ON NON-REPATRIATION BASIS
Investment
in Government Securities and units of UTI
NRIs can freely purchase units of UTI,
Central and State Government securities (other than
bearer securities) and National Plan/ Savings
Certificates by effecting remittances from abroad
through normal banking channels or by withdrawing funds
from their non-resident accounts with banks in India.
Such investments should be made through the banks
maintaining their non-resident accounts. The banks have
been permitted to credit the dividend/ interest and sale
or maturity proceeds of the units/ securities to
Ordinary Non-resident accounts of NRI. Units can also be
bought by NRIs/OCBs directly from UTI.
They can also invest on
non-repatriation basis, in bonds issued by public sector
undertakings and Mutual Funds set up by public sector
Institutions and banks, provided they have secured RBI
permission to seek investments from Non-Residents.
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Investment
in Proprietorship/ Partnership Concerns
By its Notification No. FERA
113/92-RB dated 27th April, 1992 issued under
Section 9(1) read with Section 29(1) of FERA, 1973, RBI
has granted general permission:
-
to NRI to invest by way of capital contribution in
any proprietary or partnership concern in India
engaged in any Industrial, commercial or trading
activity, on non-repatriation basis; and
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to any proprietary or partnership concern in India
to place to the credit or make payment to or any NRI
any sum invested by such NRI in that proprietary or
partnership concern or the income accruing to such
person by way of profit on his investments.
The general permission is, however
subject to fulfillment of the following conditions: -
-
The amount invested is received from
NRI investor either by remittance from abroad
through normal banking channels or by transfer of
funds from the investor’s NRE/FCNR/NRO accounts
with a bank in India.
-
The proprietary or partnership concern in India is
not engaged in any agricultural/ plantation activity
or real estate business, i.e., dealing in land and
immovable property with a view to earning profit or
earning income therefrom.
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The amount invested and the income accruing
thereon are not eligible for repatriation to any
place outside India and is payable only in non-repatriable
Indian rupees.
Consequently, it will not be
necessary for proprietary/ partnership concern in India
to obtain the prior permission of RBI for receiving
capital contribution from NRIs provided the conditions
mentioned in the above paragraph are satisfied.
Declaration in form DIN should be filed by the investee
concern with the concerned office of RBI within whose
jurisdiction it is situated within ninety days from the
date of receipt of the investment together with the
following documents.
-
Names of NRI investor’s alongwith
the amount invested by them.
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Certificate/s from the bankers in
India evidencing receipt of inward remittance/s in
foreign exchange through normal banking channel or
withdrawal of funds from investor’s NRE/FCNR/NRO
accounts.
The concerned proprietary/
partnership concern should also obtain a
non-repatriation undertaking from NRI investor and send
a confirmation to that effect to RBI while filing the
declaration in form DIN.
All profits on the capital invested
by the NRI investor may be credited either to the NRO
account of the investor with a bank in India or ploughed
back in the business on the non-repatriation basis.
Investment under the scheme is not
permitted to OCBs.
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Investment
in New Issue of shares/ debentures of Indian Companies
By Notification No- FERA 114/92- RB
dated 27th April, 1992 issued under Section
29(1) read with Section 19(1) of FERA, 1973, RBI has
granted general permission:
-
to NRIs and OCBs to take up or subscribe on
non-repatriation basis the shares or convertible
debentures issued, whether by public issue or
private placement, by a company incorporated in
India; and
-
to a company incorporated in India to issue
shares/ convertible debentures to NRIs/ OCBs by way
of new/ rights/ bonus issue and to send out of India
share/ debenture certificates to such NRIs/OCBs.
The general permission is subject to
the following:
-
the investee company does not carry on
agriculture/ plantation activities and/or real
estate business excluding real estate development,
i.e. development of property and construction of
houses
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The payment for the shares or
convertible debentures issued to such NRIs or OCBs
is received by remittances from abroad through
normal banking channels or by transfer of funds held
in investor’s NRE/ FCNR/ NRO accounts maintained
with banks authorized to deal in foreign exchange in
India or authorized co-operative/ commercial banks
in India.
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Neither the capital invested nor any income
arising therefrom whether by way of capital
appreciation or dividend or otherwise is eligible
for repatriation out of India at any time.
-
All dividend/ interest accruals and
sale proceeds of shares/ convertible debentures (if
sold in future) with permission of RBI, will be
credited to the investor’s ordinary non-resident
rupee account with a bank authorized to deal in
foreign exchange in India.
-
The company issuing the shares or convertible
debentures files a declaration, not later than
ninety days from the date of issue, with RBI in form
DIN. Where shares or convertible debentures are
issued to an OCB, a certificate in the form
specified ( OAC/OAC1) issued by an overseas auditor
, Chartered Accountant or Certified Public
accountant, showing the ownership of such OCB shall
be filed with RBI alongwith the declaration.
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Investment
by NRIs for establishment of Schools/ Colleges in India
With a view to liberalizing the
existing facilities for investment by NRIs in India, RBI
has allowed investment by NRIs in establishment of
schools and colleges in India. In case the investment is
made by NRIs through a proprietary/ partnership concern
or Indian Company on non-repatriation basis, it will be
covered under the general permission granted by RBI
Notification No- FERA 113 and FERA 114/92-RB both dated
27th April 1992. In case the concerned
investment is proposed to be made through an Indian
company on repatriation basis, it will require the
specific permission of RBI for investment under 24%
Scheme. Applications may be made to Central Office of
RBI in Form ISD®.
If the educational institution
requires affiliation to any University/ Board, it will
have to comply with the relative regulations of the
concerned State/ Central Government.
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Investment
in non-convertible debentures
Permission of RBI is necessary for
investment by NRIs/ OCBs in non-convertible debentures
of Indian Companies, applications in form ISD has to be
submitted by the Indian company and RBI will grant
permission on case to case basis. Once the permission to
Indian Company is granted, no separate approval for
non-resident investor will be necessary.
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Investment
in Mutual Funds floated by Private/ Public Sector Banks/
Financial Institutions
Mutual funds floated by private/
public sector banks/ financial institutions seeking
investment from non-residents have to obtain necessary
approval from RBI, application in form ISD is required
to be made by these banks/ institutions for permission
to allow investment by NRIs/ OCBs on non-repatriation
basis. Non-resident investors do not need a separate
approval from RBI.
Such investment can also be made
through secondary market. NRIs/ OCBs intending to invest
in Mutual funds Scheme on non-repatriation basis through
secondary market under Portfolio Investment Scheme
should submit the application through a designated
branch of an authorized dealer.
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Investment
in Money Market Mutual Fund ( MMMFs )
NRIs/ OCBs are permitted to invest
on non-repatriation basis in Money Market Mutual funds
floated by commercial banks and public sector/ private
sector financial institutions with authorization from
RBI/ SEBI. Application should be made to the RBI in form
ISD by the concerned bank/ institution. The NRIs/ OCBs
do not need separate permission from RBI for this
purpose.
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Deposits
with Companies
Public/ private limited companies can
accept deposits from NRIs within the limits prescribed
for acceptance of deposits in conformity with the
prevailing rules and subject to further limits and
conditions as may be prescribed by the RBI. The deposit
can be made either by sending remittances from abroad or
from the investor’s NRE/ FCNR/ NRO account. The
company accepting deposits should apply through an
authorized dealer to the office of RBI under whose
jurisdiction the head/-registered office of the company
is situated together with full details of the deposit
scheme. Once the necessary permission is obtained by the
company, it is not necessary for the non-resident
depositors to seek separate permission from the RBI for
placing deposits with the company concerned.
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Investment
in Commercial Paper (CP) issued by Indian Companies
Non-residents are permitted to invest
in commercial paper issued by Indian Companies on the
following terms & conditions:
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The investment is allowed only on non-repatriation
basis.
-
Payment for investment is to be received only by
remittance from abroad or out of funds held in
investors NRE/ FCNR/ NRO accounts
-
CP is to be issued only in Indian rupees.
-
Maturity proceeds of CP is creditable to the
ordinary non-resident rupee account of the investor.
-
CP issued to NRIs will not be transferable. The
Indian Company has to submit a statement in form ICP
within a period of 10 days from the closure of the
subscription to the issue.
OCBs are not permitted to invest in
CP.
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Purchase
of shares of Indian Companies by Private Arrangement
NRIs/ OCBs require permission of RBI
for purchasing shares of Indian Companies by private
placement. For this purpose, application in form FNC 7
in duplicate, is to be submitted to the concerned office
of RBI within whose jurisdiction, the registered / head
office of the investee company is situated. The
application is to be accompanied with the following
documents:
Balance Sheet and Profit & Loss Account
Statements for the preceding three years, if the
applicant is a company.
Balance Sheet and Profit & Loss Account
Statements for the preceding three years of the
company whose shares are proposed to be purchased.
An auditor’s certificate showing
fair valuation of shares to be purchased.
Certifies copies of sale deed/ agreement for sale
in respect of purchase of shares by private
arrangement.
A non-repatriation undertaking in the prescribed
form NRU.
In case the proposed investment is to be made by
an OCB, a certificate in original of a recent date
in form OAC/ OAC1 from an overseas auditor/
chartered accountant/ certified public accountant.
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Investment
in shares/ debentures of companies through stock
exchange (Portfolio investment)
NRIs and OCBs are permitted to invest
in shares/ debentures of companies through stock
exchange under "Portfolio Investment Scheme".
The investment is permitted both on non-repatriation and
on repatriation basis.
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