Can an NRI buy own property in India?

Let’s Find Out.

Though with FEMA the foreign exchange laws have been modified and diluted significantly but due to the legacy of FERA excesses during the old days, NRI people are very apprehensive while dealing with new projects in Mumbai or in India. Since the matter of purchase of immovable property in India by NRIs is covered under the provisions of FEMA, it is advisable to understand the legal position.

Provisions applicable:

RBI has issued a notification granting general permission to NRIs for the purchase of certain residential properties in Mumbai, India without obtaining any specific permission from RBI. So Indian Citizens who have become NRIs, for FEMA purposes can acquire certain immovable property situated in India without any specific permission from RBI.

Types of properties where NRI or POI can invest:

Though RBI has given general permission to the NRIs to purchase immovable properties in India, the permission does not grant the power to acquire any and every property in India. The NRIs are allowed to purchase only residential or commercial property. So NRIs cannot purchase any agricultural land or

plantation property. Thus, NRIs cannot purchase a farmhouse in India. This way as long as the investment being made by NRIs in India is either in residential property or commercial property, they are not even required to intimate RBI about such purchases, even post conclusion of the transaction. Moreover, there is no restriction as to the number of residential or commercial property an NRI can acquire.

Source for financing the purchase of immovable property in India:

The payment for the purchase of permitted property by an NRI can be made by way of remittance through banking channels from abroad or from money lying in their NRE/NRO or FCNR account. The money for the purchase of the permitted properties has to come only through banking channels hence the payment cannot be tendered in the form of traveler’s cheques or foreign currency.

NRIs are even allowed to finance the purchase with home loans in Indian Rupees. The home loan can be granted by the Indian employer of the NRI employee for the purpose of financing of the property.

Servicing of the home loan:

As far as payments of EMI for the home loan taken in Indian Currency in India is concerned, the same can be done either by direct remittance from abroad or from the money lying to the credit in NRE/NRO/FCNR account of the NRI. In addition to the above sources, the home loan can even be serviced out of the rents received from such property or money transferred to borrowers account from the account of relatives of such borrower.

Who can be named as a joint owner of the properties?

The property to be purchased by an NRI can either be purchased in a single name or jointly with any other NRI. It may be noted that a resident Indian or a person who is otherwise not allowed to invest in the property in India cannot even be made a joint owner in such property though the second named person

Continuance of ownership of properties after becoming NRI:

A lot of people who are taking up jobs outside India and thus would become NRI’s are worried about what would happen to the properties, which they already own. There is nothing to worry about for such properties. A person who owns a property when he becomes an NRI can continue to hold the property in his name. However, an NRI is allowed to let out the property, which he owned when he became an NRI without taking any permission from RBI.

So from the above discussion, it becomes clear that buying residential projects in Mumbai or office in India by the NRIs is not very difficult as long as you are either able to pay for it or get a home loan.

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