Non-Resident Indians, if you want to make investments that will guarantee you today's highest, most secure interest rate for coming years, consider India at this time. With elections coming to a close and with hopefully a stable government, your investments can soar and pay you rich dividends. Here are some of the answers to questions on investments, commonly asked by NRIs, clarified by RBI in its release.Government securities/units
Can NRIs invest their funds in government securities or units of Unit Trust of India (UTI)?
Yes. NRIs are freely permitted to invest their funds in government securities or units of UTI through authorised dealers. Units can also be purchased directly from UTI.
Can NRIs make investments in National Savings Certificates issued by post offices in India?
Yes. Investment in National Savings Certificates can be made by NRis subject to the terms and conditions applicable to the sale/issue of such certificates. However, NRIs are not permitted to invest inbearer securities like Indira Vikas Patra/Kisan Vikas Patra.
Can government securities/units be freely transferred or sold?
Yes, provided the transfer/sales is arranged through an authorised dealer. Units can, however, be repurchased directly by UTI.
Are sale/maturity proceeds of government securities/units/National Savings Certificates allowed to be repatriated abroad?
If such securities were purchased out of funds remitted from abroad or out of NRE/FCNR accounts, sale/maturity proceeds can be repatriated.
Sale/maturity proceeds of securities purchased out of funds in NRO accounts can only be credited to NRO accounts and cannot be remitted abroad. Interest earned during fiscal 1994-95 and onwards can, however, be remitted to the extent permitted by the RBI.
Company shares/debentures
NRIs are permitted to make direct investments in proprietary/partnership concerns in India as also in shares/debentures of Indian companies. They are also permitted to make portfolioinvestments, that is, purchase of shares/debentures of Indian companies through stock exchanges in India. These facilities are granted both on repatriation and non-repatriation basis.
Direct investment without repatriation benefits
Is permission of the RBI required for NRIs to invest in proprietary/partnership concerns on non-repatriation basis?
No. The RBI has granted general permission to non-resident individuals of Indian nationality/ origin to invest by way of capital contribution in any proprietary or partnership concern in India on non-repatriation basis provided the investee concern is not engaged in any agricultural/plantation activity or real estate business. This facility is, however, not available to OCBs.
Is permission of the RBI required for making investments in new issues of Indian companies on non-repatriation basis?
No. Indian companies have been granted general permission to accept investments on non-repatriation basis, in shares/convertible debentures by wayof new/rights/bonus issue provided the investee company is not engaged in agricultural/plantation activity or real estate business (excluding real estate development, that is, development of property and construction of house) or chit fund or is not a Nidhi company.
Are any formalities required to be completed by NRIs for getting the benefit of the above general permission?
No. However, the firms/companies concerned are required to file declarations with the RBI in form DIN giving particulars of the investments made, within 90 days from the date of the investment.
Can NRIs individuals make investments in domestic public/private sector mutual funds or money market mutual funds floated by commercial banks and public/private sector financial institutions on non-repatriation basis?
Yes.
Can Overseas Corporate Bodies (OCBs) make similar investments in mutual funds on non-repatriation basis?
OCBs can make such investments only in domestic public/private sector mutual funds. They canalso make investments in money market mutual funds.
Can NRIs make investments in non-convertible debentures of Indian companies?Yes. Applications for necessary permission should be made to the RBI
(Central Office) by the concerned Indian company in form ISD.
Can NRIs purchase existing shares/debentures of an Indian by private arrangement?
Yes. The RBI permits NRIs, on application in form FNC 7, to purchase shares/debentures of existing Indian companies on non-repatriation basis. An undertaking about non-repatriation is to be given in form NRU.
Is it necessary for a resident, holding securities in Indian companies, to secure any approval from the RBI on his becoming a non-resident for holding such securities?
No. The RBI has granted general permission to companies in India to enter the overseas addresses of the shareholders in their books in such cases provided the companies obtain undertakings from the holders that they will not seek repatriation of any income or saleproceeds of the security.
Is income/interest earned on investments/deposit held in India by NRIs on non-repatriation basis allowed to be repatriated?
Yes, the income/interest accruing during fiscal 1994-95 and onwards on bank deposits and investments held by NRIs with non-repatriation benefits will be eligible for repatriation as under:
(a) Up to to $1,000 or its equivalent in full and one-third of the balance income earned during the financial year 1994-95;
(b) Up to $1,000 or its equivalent in full and two-third of the balance income earned during the financial year 1995-96.
(c) The entire income earned during fiscal 1996-97 and onwards.Note: The investment/principal amount of deposits made/held on non-repatriation basis will, however, not be allowed to be repatriated abroad.
What is the procedure to be followed for seeking repatriation in such cases?
NRIs should designate a branch of an authorised dealer through whom the remittance of income is to be made and make anapplication in form RCI to the designated branch giving details of incomes earned during the previous financial year along with a Chartered Accountant's certificate. The designated branch will allow the remittance of net amount (i.e. after payment of tax) or credit it to NRE/FCNR account of the applicant.
The Jindals are Delhi-based chartered accountants
