Investment Info for NRIs

NRIs are freely permitted to invest their funds in Government securities / National Savings Certificates / Units of UTI through authorised dealers ( Banks authorised to deal in foreign exchange ). Units can also be purchased directly from UTI. However they are not permitted to invest in bearer securities like Indira Vikas Patra / Kisan Vikas Patra. The securities can also be freely transferred / sold through authorised dealers. UTI units can also be resold directly to UTI.

If the securities were purchased out of funds remitted from abroad or out of NRE /FCNR accounts, sale / maturity proceeds can be repatriated. However, sale / maturity proceeds of securities purchased out of funds in NRO accounts would not be repatriable and can only be credited to NRO accounts. But the interest earned on such investments is fully repatriable, subject ot production of No Objection / Clearance from the Income Tax Authorities.

NRIs can make direct investments in proprietory / partnership concerns in India as also in the primary issues of shares / debentures of Indian Companies. They can also make portfolio investments, i.e. purchase of shares/debentures of Indian companies through stock exchanges in India. These facilities are available on both repatriation and non-repatriation basis.

NRIs can invest by way of capital contribution in proprietary / partnership concerns and companies in India on non-repatriation basis provided the investee concern is not engaged in any agricultural plantation activity or not engaged in chit funds business / Nidhi company or real estate business ( However, there is no bar in investing in real estate development i.e. development of property and construction of houses.) Investment in companies may be as shares/ convertible debentures, by way of new/ rights / bonus issues. NRIs can also make investments in domestic public / private sector mutual funds or money market mutual funds floated by commercial banks and public/private sector financial institutions.

Income/interest earned on such non-repatriable investments, is permitted to be repatriated fully for the year 1996-97, subject to production of a Chartered Accountant's Certificate / undertaking from the NRI.

NRIs can make investments with foreign exchange funds in new issues of shares / convertible debentures of Indian companies on repatriation basis under Direct investment schemes such as 24% scheme / 40% scheme /100% scheme. They can also invest in schemes of domestic mutual funds floated by public/ private sector institutions / companies and bonds issued by Public Sector Undertakings. Since the issuing companies would be obtaining the necessary permission from RBI, the NRI investor does not have to obtain RBI's permission for investing in such shares /Debentures. However, for sale of securities, the NRI investor has to obtain permission from RBI, through a bank.

24% SCHEME:

Indian companies engaged in any activity including finance, hire purchase, leasing, trading or other services etc., (except agricultural / plantation activities) are allowed by Reserve Bank of India to issue shares / Debentures to NRIs with repatriation benefits to the extent of 24% of the new issue.

40% SCHEME:

Indian companies engaged in the following activities are allowed by Reserve Bank of India to issue shares / debentures to NRIs with repatriation benefits to the extent of 40% of the new issue.

* Industrial manufacturing units * Hotels with 3,4 or 5 star category * Hospitals and diagnostic centres * Shipping companies * Developments of computer software * Oil exploration services

100% SCHEME:

Indian companies engaged in the following activities are allowed by RBI to issue shares / debentures to NRIs with repatriation benefits upto 100% of the new issue subject to certain prescribed conditions;

* High priority industries listed in Annexure III to the Statement of Industrial Policy dated 24th July 1991 of the Government of India * Development of serviced plots and construction of built up residential premises * Real estate covering construction of residential and commercial premises including business centres and offices * Development of township * City and regional level urban infrastructure facilities including roads and bridges * Manufacture of building materials * Financing of housing development * Air taxi operators * 100% Export Oriented Units or Units in Export Processing Zones. The NRI investor need not obtain permission of RBI for the above investments. The investee company would obtain the necessary permission.

NRIs are also permitted to undertake revival of sick industrial units by making bulk investment in them to the extent of 100% either by way of purchase of existing equity shares or in the form of subscription to new equity issues. Repatriation of capital in such cases is allowed after minimum period of 5 years, on the merits of individual cases.

NRIs (and not OCBs) desiring to make portfolio investments in shares / debentures of Indian companies and other securities on repatriation / non-repatriation basis have to apply to a designated Bank branch in one of the prescribed forms.

DESIGNATED BRANCHES FOR PIS:

Sr. No	Address	Tel No.	Fax No.
01	State Bank of India, Personal Banking Branch, Mumbai Samachar Marg, Mumbai - 400 023	022 - 2266 2641	022 - 2266 2069
02	State Bank of India, NRI Branch, 1st Floor, Tulsiani Chambers, 212 Nariman Point, Mumbai - 400 021	022 - 2282 0031	022 - 2204 8852
03	State Bank of India, Personal Banking Branch, 11, Sansad Marg, New Delhi - 110 001	011 - 2373 2290	011 - 2334 1989
04	State Bank of India, Calcutta Main Branch, 1 Strand Road, Calcutta - 700 001	033 - 2220 2215	033 - 2220 6850
05	State Bank of India, NRI Branch, 103A, Anna Salai, Chennai - 600 002	044 - 2857 1719	044 - 2857 1703
06	State Bank of India, Chennai Main Branch, State Bank Building, Rajaji Salai, Chennai - 600 001	044 - 2522 7501	044 - 2522 6866
07	State Bank of India, NRI Branch, Deepa Theatre Bldg., Ravipuram, M. G. Road, Earnakulam, Kochi - 682 016	0484 - 2382 312	0484 - 2369 811
08	State Bank of India, NRI Branch, Near Ganapathy Kovil, Vazhuthacaud, Thiruvananthapuram - 695 014	0471 - 2321 322	0471 - 2326 200
09	State Bank of India, NRI Branch, Post Box No.47, 917-918 G.T.Road, Jallandhar -144 001	0181 - 2235 897	0181 - 2235 282
10	State Bank of India, NRI Branch, SCO 111-113, Sector 17B, Chandigarh - 160 017	0172 - 2709 414	0172 - 2701 674
11	State Bank of India, NRI Branch, Marina Arcade, G12A, Connaught Circus, New Delhi - 110 001	011 - 2332 6241	011 - 2332 4275
12	State Bank of India, Baroda Main Branch, Opp. Jamnabai Hospital, Mandvi, Baroda - 390 017	0265 - 2461 066	0265 - 2460 416

An NRI has to confine his transactions to one designated branch only. He can authorise a resident as his agent in India to purchase / sell shares on his behalf, but all transactions should be routed through the designated bank branch.

CEILINGS:

Investment under the Portfolio Investment Scheme is subject to an overall ceiling of 10% of the paid up share capital / each series of convertible debentures of a company by NRIs, Overseas Corporate Bodies (OCBs) (can be enhanced to 24% by a General Body Resolution of the company). An individual NRI / OCB can make investment up to 5% of the paid-up share capital / each series of convertible debentures of a company. However, there is no ceiling on investment in domestic mutual funds.

Shares, bonds and debentures acquired by NRIs on non-repatriation basis under both Direct Investment Scheme and Portfolio Investment scheme can be freely sold through stock exchanges. The sale proceeds would have to be credited to the NRO account of the seller.

Shares, bonds and debentures acquired by NRIs on repatriation basis under the Portfolio Investment Scheme can be sold through stock exchanges. The repatriation of the sale proceeds or credit thereof to the NRE/FCNR account of the beneficiary would be subject o payment of capital gains tax.

In respect of shares, bonds and debentures acquired by NRIs, on repatriation basis under the Direct Investment Scheme, the investor needs to obtain permission form RBI, through a bank.

Long term capital gain in respect of securities purchased with foreign exchange. (if the securities are held in one's name for at least one year) is taxed at a flat rate of 10% for NRIs.

(i.e. other than through Stock Exchanges or directly from the issuing companies) - requires permission of RBI.

Shares and securities can be freely gifted by NRIs to resident relatives. However, gifting to non-resident relatives would require RBI's permission.

Can be availed of by NRIs from banks after obtaining prior permission of RBI for meeting the borrower's personal / business requirements and not for re-lending or investment in shares / securities / immovable property / agricultural plantation activities or farm house / real estate business.

Non-resident Indian citizens can freely purchase and sell residential and commercial properties in India, foreign citizens will have to obtain RBI's permission for the same. However, a foreign citizen of Indian origin* does not have to obtain RBI's permission for purchasing and selling residential and commercial properties (other than agricultural / plantation land and farm house ) for bonafide purposes provided the purchase is met out of foreign exchange funds. In such cases, a declaration has to be submitted to RBI within 90 days of the purchase.

Sale proceeds of not more than two residential properties and any number of commercial properties purchased on or after 25th May 1993 by NRIs with foreign exchange funds and sold after at least 3 years can be repatriated, after obtaining RBI's specific permission for the same, up to the purchase amount made with foreign exchange funds. RBI's permission would have to be sought within 90 days of the sale of the property.

Giving and receiving of gift of properties are freely permitted for Indian citizens, but foreign citizens require RBI's permission for the same. However, a foreign citizen of Indian origin does not have to obtain RBI's permission for acquiring or disposing of by gift up to two residential properties from or to a relative.

The NRIs can freely let out their residential or commercial properties in India. The rental income should however be routed through the NRO account. The rental income is freely repatriable from 1996-97, subject to production of appropriate undertaking from the NRI / certificate from the Chartered Accountants.

Non-resident Indian citizens can avail of housing loans from banks and housing finance institutions for acquisition of one house / flat subject to prescribed conditions. At least 25% of the cost of acquisition should be met with foreign exchange funds.

*A foreign citizen is deemed to be of Indian origin if he or his father or paternal grandfather was at any time a citizen of India, provided he is not a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal.