Normal requirement

Till July 1992, the normal requirement for non-resident Indians returning permanently to India was to liquidate all foreign currency assets, close all foreign bank accounts and repatriate the entire foreign exchange to India within 90 days of becoming resident (Notification, dated 15th June, 1977). Hence, if a person stayed in India for more than 3 months in circumstances indicating his intention to settle in India, this requirement was of crucial importance. It may also be noted that the RBI was not granting any extension of time within which exchange was to be repatriated.

There has been a spate of notifications in July and September 1992 granting various exemptions to returning Indians as a part of the liberalisation process. Basically, the notifications deal with the following situations:

(1) Retention of Foreign Exchange abroad.

(2) Utilisation of funds held in foreign currency accounts abroad.

(3) Acquisition, holding and disposal of other assets held abroad.

The various notifications issued are dealt with in succeeding paras, but it would be appropriate to point out at this stage that the nofications have the following common features:

(a) They apply to a person who has been a resident outside India, for a continuous period for one year of more.

(b) The foreign currency or the foreign exchange assets, should have been acquired (i) otherwise than in contravention of FERA while he was resident outside India, or (ii) through employment, business or vocation outside India, taken up or commenced while such person was resident outside India.

It may be noted that residence outside India, for a continous period of one year or more, does not imply that visits to India would disentitle the exemption. It seems that such short visits cannot affect the residential status.

Accordingly, what was a normal requirement before July / September 1992, viz: repatriation of foreign exchange into India / sale and repatriation of proceeds of assets held abroad, would now be applicable only if the conditions stated in the notifications are not complied with. Such situations could be as under:

(i) Where the person has been a resident outside India for less than one year.

(ii) Where the foreign exchange / assets has / have been acquired in circumstances other than stated in the notification.

(iii) The assets are not covered by any of the notifications.

Exemption notifications

The Government of India has vide Notification No. GSR 679(E), dated 17th July, 1992 in supersession of its earlier notification dated 15th June, 1977 issued under section 14 of FERA, granted permission to persons resident in India, for holding foreign exchange outside India, if the foreign exchange was acquired,

(a) otherwise than in contravention of FERA, while he was resident outside India, or

(b) through employment, business or vocation outside India, taken up or commenced while such person was resident outside India.

However, the person must have been resident outside India for a continous period of not less than one year.

Similarly, RBI has issued circular No. AD(MA) Circular No. 51, dated 22nd September, 1992 which explains five separate notifications issued under sections 8, 9, 19, 24 and 25 of FERA. As stated above, all the notifications apply where the three requirements are fulfilled. Subject to these requirements being fulfilled, the notifications grant exemption as under:

(i) Notification No. FERA 116/92-RB, dated 7th September, 1992 which grants exemption from provisions of section 8(1) which deals with restrictions on purchase, acquisition, etc., of foreign exchange; the notification grants general permission for maintenance of, and operations on an account, expressed in any foreign currency :

- with an authorised dealer in India, in accordance with any schemes approved by RBI in this behalf; or

- outside India.

(ii) Notification No. FERA 117/92-RB, dated 7th September, 1992, which grants exemption from the provisions of section 9(1)(a), which deals with restrictions on making of any payment to or for the credit of any person resident outside India. The notification grants exemption for making of such payment out of foreign exchange held:

- in India, in accordance with any schemes approved by the RBI, in this behalf; or

- outside India.

(iii) Notification No. FERA 118/92-RB, dated 7th September, 1992, grants general permission under section 19(1) to acquire, hold, or dispose off, any foreign security acquired out of foreign exchange held :

- in India, in accordance with any schemes approved by Reserve Bank in this behalf; or

- outside India

(iv) Notification No. FERA 119/92-RB, dated 7th September, 1992 issued under section 24, permits the making of settlement of gift of any foreign exchange held :

- in India, in accordance with any schemes approved by the Reserve Bank in this behalf; or

- outside India.

The notification also extends to settlement or gifts made out of income from such foreign exchange.

(v) Notification No. FERA 120/92-RB, dated 7th September, 1992, grants general exemption for the acquisition outside India of immovable property, out of foreign exchange held :

- in India, in accordance with any schemes approved by the Reserve Bank in this behalf; or

- outside India.

The exemption also extends to acquiring immovable property out of incomes arising from foreign exchange held as above.
 

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