What changed
This master circular compiles all existing FEMA regulations on acquisition and transfer of immovable property by NRIs, PIOs, and foreign nationals of non-Indian origin into a single reference document. It includes updated instructions as of June 25, 2014, and carries a sunset clause, meaning it will be withdrawn and replaced by a new master circular on July 1, 2014.
What it means for you
For banks, this circular serves as a consolidated guide for processing property transactions by NRIs and PIOs, ensuring compliance with FEMA. It clarifies that NRIs and PIOs can purchase residential/commercial property (excluding agricultural land, plantations, farmhouses) without prior RBI approval, but payments must be through specified channels. Banks must verify that sale proceeds repatriation follows the rules outlined, and they should prepare for the upcoming replacement circular.
What you must do
- Ensure all NRI/PIO property transactions comply with FEMA 21/2000-RB and this master circular's payment rules.
- Verify that payments for property purchases are made only via inward remittance or debit to NRE/FCNR(B)/NRO accounts, not through traveller's cheques or foreign currency notes.
- Advise NRIs/PIOs that no documentation needs to be filed with RBI for residential/commercial property purchases under general permission.
- Prepare to transition to the updated master circular expected after July 1, 2014, by reviewing the sunset clause implications.
- Train staff on the specific restrictions for agricultural land, plantation property, and farmhouse transactions.
Who it affects
All Category-I Authorised Dealer banks, Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), Foreign nationals of non-Indian origin residing outside India, Foreign embassies, diplomats, and consulate generals
Can an NRI buy agricultural land in India under this circular?
No, the circular explicitly states that NRIs cannot purchase agricultural land, plantation property, or farm houses. These categories are excluded from the general permission.
What payment methods are allowed for an NRI buying a residential property?
Payment must be made through funds received via inward remittance from outside India or by debiting an NRE, FCNR(B), or NRO account. Traveller's cheques and foreign currency notes are not permitted.
Does an NRI need to file any documents with RBI after purchasing a residential property?
No, if the purchase is made under the general permission, the NRI is not required to file any documents with the Reserve Bank.