The Reserve Bank of India (“RBI”) has clarified that Non-Resident Indian (“NRI”) and Overseas Citizen of India (“OCI”) do not require prior approval of RBI for acquisition and transfer of immovable property in India except in relation to agricultural land, farm house or plantation property as per Foreign Exchange Management (Non-debt Instruments) Rules, 2019 as amended from time to time.
The clarification has been issued due to a recent judgment of the Supreme Court in Asha John Divianathan v. Vikram Malhotra (“Judgment”), wherein it was held that the prior permission of RBI as per section 31 of Foreign Exchange Regulation Act, 1973 (“FERA”) is mandatory and contravention of the same shall lead to penalty under section 50 and other consequences under FERA.
RBI has clarified that since FERA was repealed with effect from June 1, 2000, presently, NRIs and OCIs are governed by the provisions of Foreign Exchange Management Act, 1999 (“FEMA”). Accordingly, the requirement of prior approval of RBI is as per Foreign Exchange Management (Non-debt Instruments) Rules, 2019 as amended from time to time.
Please find a copy of the press release here.
This update has been contributed by Nidhi Arya (Partner) and Aditi Singh Kashyap (Associate).
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