Investment
in real estate development by OCBs (Overseas Corporate Bodies):
Non Resident Indians are now permitted to enter into the business of real estate
development. This can be done by either forming a partnership firm or investing in a
company incorporated in India. The Reserve Bank Of India has relaxed certain provisions
with regard to investment in Indian companies engaged in housing and real estate
development.
Persons of Indian nationality/origin resident outside India (NRIs) are permitted to invest
upto 100 percent in the new issues of equity shares/convertible debentures of Indian
companies engaged/proposing to engage in the following areas :
Development of serviced plots and
construction of built-up residential premises
Real estate covering construction of
residential and commercial premises including business centres and offices
Development of township
City and region level urban
infrastructure facilities including roads and bridges
Manufacturing of building materials
Financing of housing development
Investment in
proprietary/partnership firms engaged in real estate development is permitted on
"non-repatriable" basis. The investee firm obtaining investment from the NRI/OCB
will have to file a DIN declaration within 90 days to the RBI within whose jurisdiction
the company is situated. the RBI has permitted limited repatriation facility to the
interest or income portion on the investment subject to the terms and conditions that
capital invested shall not be repatriable.
Investment in real estate development has since been extended to Overseas Corporate Bodies
(OCBs) predominantly owned by NRIs.
Overseas Corporate Body would mean any overseas company, partnership company, society and
other corporate body predominantly owned directly or indirectly to the extent of atleast
60% by NRIs and includes any overseas trust in which not less than 60% beneficial interest
is held by NRIs directly or indirectly but irrevocably.
Investment in real estate development on repatriation basis is available only to NRIs/OCBs
in companies. Repatriation of the original investment in foreign exchange made by OCBs
will be permitted with the prior permission of Reserve Bank only after a lock in period of
three years from the date of issue of shares/debentures. In addition, OCBs will be
permitted to repatriate the net profit (upto 16 %) arising from the sale of such
investment after the lock
in period of three years.
