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Reserve Bank Scheme to Allow Ownership of Property Abroad

Comments Off on Reserve Bank Scheme to Allow Ownership of Property Abroad   |   July 21, 2014    03:00am   |Contributed by Indian Realty News

KOCHI: You have got some disposable amount, and want to own a real estate asset abroad. Now, it is possible as the Reserve Bank of India (RBI) allows resident Indians to remit money abroad for the purchase of immovable properties.

According to a new RBI directive, banks are allowed to remit up to US$125,000 (around Rs 75 lakh) every financial year for any permitted current or capital account transaction, or a combination of both. The money can be used for purchasing immovable property outside India.

Financial experts point out that the new norms might be helpful for the state as it would be easier for Keralites to spot properties due to their significant overseas connection. “The RBI’s decision to allow resident Indians to acquire immovable properties outside India is encouraging. Real estate has always elicited immense interest among Indians. So, relaxation of the norms will encourage them to remit more money outside the country.

The income from such properties will then find its way back to the Indian economy regularly, adding to the foreign exchange reserves,” said Promoth Manghat, vice-president, Global Operations, at UAE Exchange. The Liberalised Remittances Scheme (LRS), notified by the RBI, allows residents to acquire and hold shares, debt instruments or other assets outside India without the prior approval of the RBI. In August last year, the RBI had reduced the ceiling from US$200,000 to US$75,000 per person in a financial year.

“Real estate prices are yet to revive in many parts of the world, except in a few places. The new RBI norms came at the right time. Keralites, who have a considerable amount of disposable money, can now look at foreign countries to buy properties,” said G Sanjeev Kumar, financial advisor and managing director at Progno Financial Planning Systems Pvt Ltd.

“Though the limit prescribed by RBI is small Individuals in Kerala can now own properties over a period of time,” said Arun Kumar, a lawyer practicing in UAE.

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