As a result of the real estate sector suffering a few setbacks in the past few years, the government and the RBI have taken certain initiatives and policy interventions. This has helped attract the attention of investors and buyers and has allowed the sector to slowly gain speed. Consequently, cities such as Mumbai are seeing a favourable improvement in the sector.
One of the steps taken by the RBI to incentivise the NRI community to invest in the real estate sector in India, was to ease up the regulations binding them. According to Nabil Patel of DB Realty, since the NRIs are a very important source of funds that allows the sector to thrive, this may bring certain positive effects. The new set of norms enables them to make an investment through the automatic route, which has further simplified the entire process. It is not necessary for NRI investors to get the approval of the RBI, which means that investors do not need to approach the Foreign Investment Paper Board in order to obtain the approval of investing in the country.
A person of Indian origin, presently residing outside India does not need to seek permission in order to buy an immovable property, the only exceptions being agricultural land, plantation property and farm houses in the country. The NRIs can carry out transactions regarding properties in different ways. Funds are received through normal banking channels within the country, otherwise through inward remittance from an overseas location. The fund may be held in the account of a non-resident, which is maintained in line with the regulations charted by the RBI. No payment can be made through foreign currency notes or traveler’s cheques. As far as agricultural land is not concerned, the NRI does not have to seek the RBI for approval.
This brings in a certain ease in the investment process and may boost the investments made in the sector. This crucial initiative came up at a time when other policies such as GST and RERA are already impacting the sector, adds Nabil Patel. Since investing in real estate is one of the profitable and lucrative investments, apart from shares and fixed deposits, this may give a much-needed push to the NRI community to shift their finances to the sector. This is also because the real estate market is not as volatile as stock market, and brings security and stability.
There was thus plenty of reasons to invest in property in the first place, such as the emotional bond created with a property that cannot be replicated by investment in a stock or share. This has now deepened due to the efficiency of the process.