Q1. Who is an NRI?
Ans.: According to the Foreign Exchange Regulation Act of 1973, Non-Resident Indians (NRIs) are:
➤ Indian citizens living abroad for employment, business or any purpose indicating an indefinite stay outside India; OR
➤ Government officials posted abroad on duty with Indian missions and agencies, drawing salaries from Government resources; OR
➤ Government officials deputed abroad on assignments with foreign governments or international agencies such as the World Bank, IMF, WHO, ESCAP, etc.; OR
➤ Officials of State Governments and Public Sector Undertakings posted or deputed abroad on temporary assignments.
Q2. Who is a foreign citizen of Indian origin?
Ans.: A foreign citizen is considered of Indian origin if:
➤ He/she has held an Indian passport at any time; OR
➤ He/she or their father/paternal grandfather was a citizen of India under the Constitution of India or the Citizenship Act, 1955.
(Note: This does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal.)
Q3. Does RBI have any guidelines for loans to NRIs/PIOs?
Ans.: Yes. As per RBI guidelines:
➤ Loan amount cannot exceed 85% of the property cost.
➤ The balance (own contribution) must be paid through remittances from abroad via normal banking channels, NRE/ NRO/ NRSR accounts.
➤ Repayment (principal + interest) must be done only via normal banking channels or through NRE/ NRO/ NRSR accounts.
Q4. Can authorized dealers grant loans to NRIs for residential property?
Ans.: Yes. Authorized dealers can provide loans to NRIs for self-occupied residential properties, subject to conditions. Repayment must be completed within 15 years via inward remittances or funds from NRE/FCNR/NRO accounts.
Q6. What documents are required with the loan application?
Ans.: Commonly required documents include:
➤ Photocopy of labor contract (with English translation, signed by employer).
➤ Latest salary certificate (in English) with details: Name, Passport No., Joining Date, Designation, Salary, Perks.
➤ Copy of labor/ID card.
➤ Copy of valid resident visa stamped on passport.
➤ Last 4 months' bank account statement.
➤ Property-related documents.
Q7. Can an NRI take a loan against immovable property in India?
Ans.: Yes, subject to conditions:
➤ Loan must be used for personal needs or own business purposes.
➤ Not allowed for chit fund, agriculture/plantation, real estate business, farmhouses or TDR trading.
➤ Loan proceeds cannot be remitted outside India.
➤ Repayment can be done via remittances, NRE/FCNR/NRO accounts, or proceeds from sale of shares/securities/property.
Q8. What incentives exist for NRIs/PIOs/foreigners in Indian real estate?
Ans.: The relaxation of FDI norms in 2006 opened equal opportunities for NRIs, PIOs and foreigners. Key highlights:
➤ Free to invest in land, develop, construct and sell.
➤ FDI allowed via automatic route in housing, townships, commercial areas and infrastructure projects.
➤ Restrictions on minimum land area and units removed.
➤ For construction, minimum built-up area: 50,000 sq. m; minimum land area: 25 acres.
Q9. Is there a time frame to complete construction?
Ans.: Yes. Developers must complete at least 50% of the project within 5 years of obtaining approvals. Typically, projects finish in 3 years.
Q10. How does the automatic route for FDI work?
Ans.: The automatic route simplifies investments:
➤ No RBI or Foreign Investment Promotion Board approval required.
➤ Reduced paperwork and formalities.
➤ Boosts investor confidence and ease of doing business.
Q11. What should overseas investors consider before investing?
Ans.: Investors should carefully assess:
➤ The target segment (residential, retail or office space).
➤ Legal and real estate consultancy support.
➤ Demand-supply trends, infrastructure, power, security and future city plans.
Q12. What steps should NRIs follow for clearances?
Ans.: Steps include:
➤ Consult property/market advisors for the preferred city.
➤ Define investment objectives, size and expected returns.
➤ Typical yields: 8–12% (office) and 4–6% (residential).
➤ Check if land is for development or investment.
➤ Evaluate utilities (power, water, connectivity, etc.) and infrastructure plans.
Q13. Is single-window clearance possible in India?
Ans.: Not always. Multiple authorities are involved:
➤ Town planning, design, fire safety and elevator approvals.
➤ Efforts are ongoing to simplify and make the process more transparent.
Q14. Who are the sanctioning and monitoring authorities?
➤ Ans.:
➤ In some states: Municipal authority is final authority.
➤ In smaller states/non-urban areas: Town & Country Planning Corporations monitor.
➤ In urban areas: Municipal authority grants final clearance (electricity, water, etc.).
Q15. What are the new FDI norms for capitalization?
Ans.:
➤ Wholly-owned subsidiary: Minimum USD 10 million.
➤ Joint venture: Minimum USD 5 million.
➤ Capitalization must be brought in within 6 months of business commencement.
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