New re­gions on RBI mon­i­tor

To con­trol cap­i­tal mov­ing in and out of In­dia, RBI has added Hong Kong and Ma­cau to the list of re­gions where peo­ple need the apex bank’s permission to ac­quire im­move­able prop­erty in In­dia

HT Estates - - HTESTATES - Shob­hit Agar­wal

In a re­cently-re­leased cir­cu­lar, the Re­serve Bank of In­dia (RBI) has added Hong Kong and Ma­cau to the list of the coun­tries /egions where cit­i­zens need to take prior permission of the apex bank be­fore ac­quir­ing or trans­fer­ring im­move­able prop­erty in In­dia. The ad­di­tion is in line with RBI’s ear­lier cir­cu­lar and can­not be called a sur­prise, as it is ob­served that Bei­jing con­tin­ues to have a sig­nif­i­cant say in their po­lit­i­cal frame­work and Ma­cau and Hong Kong are the two spe­cial ad­min­is­tra­tive re­gions of China which have been on the list since 2000. The orig­i­nal list also in­cludes neigh­bour­ing coun­tries like Pak­istan,Bangladesh, Sri Lanka, Afghanistan, Iran, Nepal and Bhutan.

Why this re­stric­tion?

The RBI’s pri­mary goal is to have con­trol over cap­i­tal mov­ing into and out of In­dia; real es­tate has al­ways been a sec­tor which can con­sume size­able sums. There is a prob­a­bil­ity that funds com­ing into the coun­try via real es­tate trans­ac­tions might get used for un­war­ranted pur­poses. Con­sid­er­ing the cur­rent geopo­lit­i­cal sce­nario, the move is proac­tive and apt.

Does this rule ap­ply to ev­ery­one re­sid­ing in the coun­tries on the list? The rule does not ap­ply to In­dian cit­i­zens res­i­dent out­side In­dia, who can ac­quire or trans­fer any im­move­able prop­erty other than agri­cul­tural or plan­ta­tion prop­er­ties or farm­houses. In case of trans­fer, the trans­feree needs to be ei­ther a cit­i­zen of In­dia or a per­son of In­dian ori­gin ( PIO) res­i­dent out­side In­dia.

Per­sons of In­dian ori­gin res­i­dent out­side In­dia get the same ex­clu­sion as cit­i­zen of In­dia, with a set of con­di­tions that the buyer or trans­feree has to be ei­ther an In­dian cit­i­zen or per­son of In­dia ori­gin. Also, the funds must be re­ceived in In­dia by way of in­ward re­mit­tance from any place out­side In­dia. PIOs can also ac­quire im­move­able prop­erty by way of gift from per­sons res­i­dent in In­dia, or In­dian cit­i­zens res­i­dent out­side In­dia, or per­sons of In­dian ori­gin. The same rule ap­plies to in­her­i­tance of prop- erty if the orig­i­nal ac­quirer had com­plied with all the for­eign ex­change reg­u­la­tions pre­vail­ing at the time of acquisition of the prop­erty.

This means that there is no change in the reg­u­la­tions for cit­i­zen of In­dia stay­ing in­side or out­side the coun­try, and for per­sons of In­dian ori­gin. They can con­tinue to buy prop­er­ties in In­dia in the same man­ner as be­fore. How­ever, they can­not ac­quire or trans­fer any land While res­i­dents of the men­tioned coun­tries can­not pur­chase or trans­fer im­move­able prop­er­ties in In­dia with­out prior ap­proval of the RBI, they can def­i­nitely take up space on lease for a max­i­mum of five years. The cir­cu­lar specif­i­cally high­lights the two coun­tries as ad­di­tions to the ear­lier list of eight. This means that there is no change in rules with re­spect to cit­i­zens of any coun­tries not part of the ex­clu­sion list. They can con­tinue buy­ing or trans­fer­ring im­mov­able prop­er­ties in In­dia by duly ful­fill­ing the con­di­tions laid by the RBI.

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