Company Shares/Debentures

Direct Investment without Repatriation Benefits

Is permission of Reserve Bank required for NRIs to invest in proprietary/partnership concerns on non-repatriation basis ?

No. Reserve Bank 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 Reserve Bank 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 way of new/rights/ bonus issue provided the investor company does not carry on agricultural/plantation activity a and/or real estate business (excluding real estate development i.e. development of property and construction of houses).

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 a declaration with Reserve Bank in a specified form giving particulars of the investments made within ninety days from the date of investment.

Can NRIs make investment in non-convertible debentures of Indian companies ?

Yes. Applications for the purpose are required to be made to Reserve Bank in the prescribed form by the Indian company concerned.

Can NRIs purchase existing shares/debentures of Indian companies by private arrangement?

Yes. Reserve Bank permits NRIs,on application in the prescribed form, to purchase shares/debentures of existing Indian companies on non- repatriation basis.

Is it necessary for a resident, holding securities in Indian companies, to secure any approval from Reserve Bank on his becoming a non-resident for holding such securities?

No. Reserve Bank has granted general permission to companies in India to enter the overseas address of the shareholder in their books in such cases provided the companies obtain an undertaking from the holder that he will not seek repatriatioin of any income, dividend or sale proceeds of the security.

Are incomes/interest earned on investments/deposits held in India by NRIs on non-repatriation basis allowed to be repatriated ?

Yes. Incomes/interest earned during the financial year 1994-95 and onwards on investments held by NRIs with non-repatriation benefits will be eligible for repatriation as under. Upto US$ 1000 or its equivalent in full and one-third of the balance income earned during the financial year 1994-95. Upto US$ 1000 or its equivalent in full and two-third of the balance income earned during the financial year 1995-96. he entire income earned during the financial year 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 one branch of an authorised dealer through whom the remittance of income is to be made and approach Reserve Bank for necessary permission. Such remittance will be allowed only after the payment of tax as per the provisions of the Income Tax.