What changed
This Master Circular compiles all existing FEMA regulations on acquisition and transfer of immovable property in India by NRIs, PIOs, and foreign nationals into a single reference document. It includes a sunset clause, meaning it will be replaced by an updated version after one year (July 1, 2013).
What it means for you
Banks must treat this circular as the definitive guide for processing property transactions by NRIs/PIOs. The clear distinction between NRIs and PIOs for purchase, gift, and inheritance rules reduces ambiguity. The sunset clause signals that banks should stay alert for annual updates to the regulatory framework.
What you must do
- Verify customer status (NRI/PIO) before processing property purchases or transfers.
- Ensure payment for property is only from inward remittance, NRE, FCNR(B), or NRO accounts—no traveler's cheques or foreign currency notes.
- Do not require NRIs or PIOs to file any documents with RBI for residential/commercial property purchases under general permission.
- Monitor transactions involving agricultural land, plantation property, or farm houses—these cannot be purchased by NRIs/PIOs, but PIOs may transfer such property by gift or sale to a resident Indian citizen.
- Prepare for the circular's expiry on July 1, 2013, and implement the updated version promptly.
Who it affects
Category-I Authorised Dealer banks, Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), Foreign nationals of non-Indian origin, Foreign embassies and diplomats
Can an NRI buy agricultural land in India?
No, the circular explicitly prohibits NRIs from purchasing agricultural land, plantation property, or farm houses. They can only buy residential or commercial property.
What payment methods are allowed for an NRI buying property?
Payment must be made through inward remittance from outside India via normal banking channels, or by debiting an NRE, FCNR(B), or NRO account. Traveler's cheques and foreign currency notes are not permitted.
Does an NRI need to report a property purchase to RBI?
No, if the NRI purchases residential or commercial property under the general permission, no documents need to be filed with the Reserve Bank.