The Reserve Bank of India has clarified that in terms of the regulations framed under FEMA, 1999, an Indian company receiving FDI does not require any prior approval of the Reserve Bank of India at any stage. It is only required to report the capital inflow and subsequently the issue of shares to the Reserve Bank in prescribed formats.
It may be noted that, FDI in India can be made through two routes, namely, the automatic route, where no prior approval from any authority is needed for an Indian company to receive FDI and the approval route, where the company receiving FDI requires prior approval of the Foreign Investment Promotion Board (FIPB). FDI under both the routes is subject to FDI policy and the conditions laid down in the relevant Regulations framed under FEMA.
The government has approved a proposal allowing investment made by NRIs to be deemed as domestic investment on par with resident investments. The Union Cabinet also approved the proposal that NRI includes OCI cardholders as well as PIO cardholders.
The government decided to amend the FDI policy to incorporate the definition of NRI as an individual resident outside India who is a citizen of India or is an ‘OCI cardholder within the meaning of Section 7(A) of Citizenship Act, 1955. PIO cardholders registered as such under a notification issued by the centre are deemed to be ‘OCI cardholders’. All this will enable investments by NRIs, Overseas Citizen of India (OCI) and Persons of Indian Origin (PIO) cardholders under Schedule 4 on non-repatriation basis, across sectors, without being subjected to the conditions associated with foreign investment.
Housing finance company LIC Housing Finance ( LICHFL) has recently launched two new home loan schemes -- Bhagyalaxmi Plus and New Fixed 10.
Under Bhagyalaxmi Plus scheme, home loans will be given to those women who will be the sole owner or first owner to buy a property, at a fixed rate of interest of 10.35 per cent for loans up to Rs 75 lakh for the first two years, and floating rate thereafter, according to company sources.Moreover, borrowers would get a discount of 0.25 per cent throughout the loan term on conversion to floating rates.
The 'New Fixed 10' scheme comes with fixed interest rates for 10 years, out of which first five years would carry a rate of 11.50 per cent, for loans up to Rs 75 lakh. The scheme offers customers the flexibility to exercise an option after five years to convert their loan into floating rates prevalent at that time.
Stability in housing prices and favourable rupee movements are bringing back the NRIs in a big way to the real estate market, according to HDFC sources.
To tap their interest, HDFC as also a number of property developers are undertaking special marketing campaigns including by way of organising property fairs in places with high NRI population such as the US and the UK.
Interestingly, the non-resident Indians living abroad are showing a renewed interest in the Indian housing market at a time when the local demand is relatively sluggish. Stable prices, bargain offers, availability of property management services and easing of investment norms are cited as reasons for the surge in NRI demand.
With the RBI reducing the repo rate by 25 basis points to 7.25 per cent, housing finance companies and banks are likely to reduce the home loan lending rates in the coming weeks. SBI took the lead to cut its base rate by 0.15 per cent and its revised base rate would be 9.70 per cent. A reduction in 0.25 per cent lending rate for a Rs 1 crore home loan would make EMI cheaper by Rs1,650-1700 with a cumulative interest savings potential of about Rs 4 lakh for a loan with 20 year repayment period.
An estimated 500,000 NRIs are living in Qatar. Regular Indian property shows and road shows were held to market housing projects across expatriate Indians and the response has so far been quite encouraging. However, the Qatarisation drive initiated by the government has impacted the NRI demand towards investment in Indian real estate.
The local government is on a localisation drive of inducting workforce in the private sector with the result 30 per cent of workforce, predominantly of Indian origin, have recently been laid off. This has slowed down the overall tempo of investment in housing as Indian expatriates prefer to wait and watch the trend before investing their savings, said Sudhan Sundaram, Director, Propshell Business Solutions Pvt Ltd.