Purchasing a property in India ranks high in the list of priorities of a non-resident Indian (NRI). A home is a security and provides a shield to the buyer against factors like high prices and inflation. To begin with, the first thing that an NRI needs to be familiar with is the procedure of buying a property in the country.
The buying transaction is governed by the Reserve Bank of India (RBI) and the rules and regulations fall under the purview of the Foreign Exchange Management Act (FEMA). The forum called Open House on MagicBricks site where consumers post their property related queries has seen prospective NRI buyers ask about the lowdown on how to buy a property in India.
Legal Expert Asha Nayar Basu, Partner, S Jalan & Co. Advocates provided the fundamentals that need to be looked at before a purchase. Firstly, an NRI may acquire any immovable property other than agricultural land/farm house/ plantation property in India by purchase. Secondly, funding of the transaction can happen a) out of finances received in India by way of inward remittance from any place outside India or b) funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act.
According to the RBI website, no payment can be made either by traveller’s cheque or by foreign currency notes.
Thirdly, NRIs can take a home loan also for purchase of a property. RBI also allows NRIs to take a loan for repairs and renovations of their home. RBI states in its website that the buyer, however, has to adhere to the FEMA regulations at the time of taking the loan. “Banks cannot grant fresh loans or renew existing loans in excess of Rs 1 crore against NRE and FCNR deposits, either to the depositors or to third parties,” the site mentions.
Such loans can be repaid in the following manner:
a) By way of inward remittance through normal banking channel or
b) By debit to the NRE/FCNR/NRO account of the NRI/ PIO or
c) Out of rental income from such a property
d) Cheques from your local relative’s bank account
Source : – Times Property