For the purpose of making investments in India, the following categories of entities are relevant
(1) Non Resident Indian (NRI)
Non-Resident Indian nationals generally fall under the following broad categories:
(a) Indian citizens who stay abroad for employment or for carrying on any business or vocation or for any other purpose in circumstances indicating an indefinite period of stay outside India.
(b) Indian citizens working abroad on assignments with foreign Government, Government agencies or inteenational / multinational agencies like United Nations Organisation (UNO), International Monetary Fund (IMF), World Bank (IBRD), etc.
(c) Officials of Central and State Government and public sector undertaking deputed abroad on assignments with foreign Governments/agencies/ organisations or posted to their own offices (including Indian Diplomatic Missions ) abroad.
Non-resident Indians become resident in India only when they come back to India for employment or for carrying on in India any business or vocation or for any other purpose indicating an indefinite period of stay in India . They are not regarded as persons resident in India during their short visits to India, say, on holiday, leave, etc.
2. Persons of Indian Origin (PIO)
For the purpose of the facility of opening and maintenance of various types of bank accounts and making investments in shares and securities in India , a foreign citizen ( not being a citizen of Pakistan or Bangladesh ) is deemed to be a person of Indian origin if
(i) he at any time held an Indian passpost, or (ii) he or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 . (iii) A spouse of an Indian citizen or of a person of Indian origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares / securities in India are made by such persons only jointly with their NRI spouses.
3. Overseas Corporate Bodies
Overseas corporate bodies predominantly owned by individuals of Indian nationality or origin resident outside India (OCBs) include Overseas companies, partnership firms, societies and other corporate bodies which are owned directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India as also overseas trusts in which at least 60% of the beneficial interest is irrevocably held by such persons. The various facilities granted to NRIs are also available, with certain exceptions, to OCBs so long as the ownership/ beneficial interest held in them by persons of Indian nationality/ origin resident outside India continues to be at or above the level of 60% . In order to establish that the ownership interest of or beneficial interest in any OCB held by individuals of Indian nationality/ origin resident outside India is not less than 60% the concerned corporate body / trust should obtain and furnish, at the time of applying for the facility for the first time and thereafter as and when required by Reserve Bank/ authorised dealer , a certificate from an overseas auditor/ chartered accountant/ certified with public accountant in Form OAC where the ownership/ beneficial interest is directly held by NRIs, and in Form OAC1 where it is held indirectly by NRIs.
Authorised dealers maintaining bank accounts or making investments in the names or OCBs should obtain an undertaking from each such corporate body / trust stating that it will promptly intimate to the authorised dealer, if the ownership interest or the irrevocable beneficial interest held by BRIs in the OCB falls below the level of 60% at any time . The corporate body/ trust should also submit a certificate in Form OAC or Form OAC1 , as appropriate to the authorised dealer on an annual basis and the authorised dealer should satisfy himself that the ownership/ beneficial interest held by NRIs continues to be at or above the level of 60% . If such ownership/ beneficial interest is reduced to a level below 60% , the authorised dealer should report the matter to Reserve Bank immediately for instructions together with full particulars of the investments made by the corporate body / trust in its name.
In the case of closely held OCBs i.e. where shareholders belong to the same family or are closely related to each other, certificate in Form OAC/ Form OAC1 may be submitted in the first instance along with documentary evidence to the effect that the shareholders belong to the same family or are closely related to each other, Annual submission of OAC/ OACI thereafter is not necessary and it will suffice if a certificate signed by the Managing Director/ Chief Executive Officer of the OCB is submitted stating that there is no change in the shareholding pattern since submission of the last certificate