In a recent step taken by the RBI, the bank has relaxed previous complex and bureaucratic restrictions which had prevented many Non Resident Indians (NRIs) from purchasing property in India. Under the current proposals, NRIs will be able to buy property jointly with their foreign spouses. Previously, this process was very complex because of the restrictions place by the FEM Act (Foreign Exchange Management Act).
With the new initiative, the bank will allow NRIs to buy houses or other properties jointly with their foreign spouse even if the spouse has a foreign passport. At presently, the NRIs have to seek for a prior permission of the RBI in order to do carry out such property transactions. Often this has led to inconsistent decisions being taken in many cases.
G.Padmanabhan,the executive director at RBI, has said, “This is an issue that requires examination in consultation with the Government of India. In fact, I have directed a comprehensive review of FEMA 21(notification) under which such transactions are dealt with.”
With a boom in these kinds of applications, he added, each applications needs permission from the RBI and this is a time consuming process.
According to the notation no. FEMA 21/2000, there are some specified regulations or rules that permit the NRIs to purchase immovable property, other than agricultural or plantation property in India. This regulation notation also applies to certain foreign companies seeking permits to establish branches in India, provided that their purchases are purely business relevant.
This regulation is applied to foreign nationals who have NRI spouses and wish to buy immovable property in the country. In order to acquire the property, the persons will have to provide for a “resident of India” proof in regard to the rules cited by the FEMA.
This fundamental review of existing policies will hopefully allow for a simplified process and an increased inflow of applications from NRIs looking to buy homes in India. Though the restrictions on a foreign national spouse buying a property remain, the NRI partner can also buy as well as dispose off with the property as a sole owner. However, even if a foreigner is married to a Non Resident Indian, they are still prohibited from purchasing property in India unless they can demonstrate that he/she is a “resident of India” as interpreted by the FEMA rules.
With an ever increasing market of Non Resident Indians, investing and purchasing homes and properties in India, the relaxing of the restrictions is a welcome move although it still needs the onus is still on the NRI to buy and dispose off with the property.
Lex Meridian provides a specialist service for Non Resident Indians and foreigners in the purchase, sale and transfer of property in India. If you require expert legal advice and assistance from due qualified lawyers on legal issues affecting Non Resident Indians please contact us today by email on info@lexmeridian.com or call us on +91 11 3019 4424 or +91 11 4102 8140 or contact our London, UK Office on: +44 208 123 9999.
