What changed
This is a master circular compiling existing FEMA regulations (Notification FEMA 21/2000-RB) on acquisition and transfer of immovable property by NRIs, PIOs, and foreign nationals. It includes a sunset clause, meaning it will be replaced by an updated version after one year. No new rules were introduced; it consolidates prior instructions.
What it means for you
Banks must ensure NRIs/PIOs use only permitted payment methods (inward remittance or specific accounts) for property purchases. No reporting to RBI is required for residential/commercial purchases by NRIs. The sunset clause signals that banks should stay alert for annual updates to this circular.
What you must do
- Verify that NRIs/PIOs pay for property only via inward remittance, NRE, FCNR(B), or NRO accounts, not traveler's cheques or foreign currency.
- Do not require NRIs to file any documents with RBI for residential/commercial property purchases under general permission.
- Ensure compliance with restrictions on agricultural land, plantation property, and farm houses for NRIs/PIOs.
- Monitor transactions involving foreign nationals of non-Indian origin, who may need prior RBI approval.
- Prepare for the circular's withdrawal on July 1, 2012, and implement the updated version thereafter.
Who it affects
Category-I Authorised Dealer banks, Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), Foreign nationals of non-Indian origin
Can an NRI buy agricultural land in India?
No, NRIs cannot purchase agricultural land, plantation property, or farm houses under general permission. These are restricted under FEMA regulations.
What payment methods are allowed for an NRI buying a flat in India?
Payment must be made through inward remittance from abroad or by debiting their NRE, FCNR(B), or NRO account. Traveler's cheques and foreign currency notes are not permitted.
Does an NRI need to report a residential property purchase to RBI?
No, if the purchase is under general permission, no documents need to be filed with the Reserve Bank.