NRI and OCI Buying Property in India: The FEMA Rules That Apply

A software engineer who had moved to Singapore wanted to put her savings into a plot on the outskirts of Bengaluru, and was surprised to learn she could buy an apartment in the city without any special permission, but could not buy that agricultural plot at all. The rule was not about her intentions or her funds. It was foreign exchange law, which draws a hard line around what a non resident may own in India. Understanding that line is essential for any NRI buyer, and for any resident selling to one.

The short answer. Under the foreign exchange rules administered by the Reserve Bank of India, a non resident Indian or an overseas citizen of India can freely buy residential and commercial property in India, in any number, with no special RBI permission, paying through proper banking channels. What they cannot buy is agricultural land, plantation property, or a farmhouse. The trade-off to respect: the residential and commercial route is open and straightforward, but the prohibition on farm land is a flat one, and breaching it can void the purchase and attract heavy penalties.

What can an NRI or OCI buy in India?

A non resident Indian, or an overseas citizen of India, can buy residential and commercial property in India quite freely under the foreign exchange framework. There is no cap on the number of such properties, and no prior approval from the Reserve Bank of India is needed for a normal purchase. In this respect an NRI or OCI buyer is on much the same footing as a resident when it comes to flats, houses, and commercial units, which is why so many buy homes in cities like Bengaluru.

This openness is deliberate, since the law welcomes investment into housing and commercial real estate through proper channels. The key conditions are about how the money moves and what kind of property it is, rather than about the buyer's status as such. So an NRI planning to buy an apartment in Bengaluru can generally proceed like any other buyer, doing the same title, approval, and RERA checks, while paying attention to the payment route and the type of property.

It is worth adding that an NRI who cannot be present in India for the registration can appoint a trusted person through a proper power of attorney to complete the purchase on their behalf. That is a legitimate use of a power of attorney, quite different from buying on a general power of attorney in place of a sale deed, which is a risky arrangement to avoid. The transfer still happens through a registered sale deed, with the attorney merely signing for the buyer who is abroad.

What can an NRI or OCI not buy?

The clear prohibition is on agricultural land, plantation property, and farmhouses, which an NRI or OCI cannot purchase. This is a flat restriction under the foreign exchange rules, not a matter of extra paperwork or permission that can be arranged. However attractive a farm plot or a plantation may look, and however the funds are arranged, a non resident simply cannot buy this category of property in India.

The consequences of ignoring this are serious, which is why it deserves emphasis. A purchase made in breach can be treated as void, and under Section 13 of the foreign exchange law the penalty can run up to three times the amount involved, with the authorities able to require the property to be given up. This is enforced by the Reserve Bank of India, whose framework is set out on the Reserve Bank of India website. For a non resident, the safe path is to stay firmly within residential and commercial property.

How must the purchase be paid for?

Payment for an allowed purchase must move through proper banking channels, which for a non resident usually means their rupee or foreign currency accounts held in India. In practice this means funds routed through an NRE, NRO, or FCNR account, or otherwise through normal banking channels as permitted, rather than through informal or cash arrangements. The payment route is part of what keeps the purchase compliant, so it is not a detail to improvise.

This matters because compliance is about both the property type and the money trail. Even for a permitted residential or commercial purchase, using an improper payment route can create problems, so an NRI buyer should plan the funding through the correct accounts from the start. Coordinating with your bank early, and keeping clean records of how the purchase was funded, makes the transaction smoother and protects you if questions arise later.

The funding route also matters for the future, not just the purchase. When you eventually sell, the account through which you bought, and the records you kept, affect how easily you can repatriate the proceeds abroad within the limits that apply. A purchase funded cleanly through the right accounts, with documents retained, keeps that later step simple. One that was funded informally can turn a straightforward sale into a compliance headache years down the line.

What about inheriting or being gifted agricultural land?

Inheritance is the main lawful way a non resident can come to hold agricultural land, even though they cannot buy it. An NRI or OCI who inherits agricultural land, for example from a resident parent, can generally hold it, but the ability to deal with it is limited. In particular, when selling inherited agricultural land, the buyer usually has to be a person resident in India, not another non resident.

This creates a narrow and specific set of rules that are easy to get wrong, so anyone in this situation should take proper advice rather than assume. The general purchase prohibition and the inheritance exception sit together, and the details, including who you may sell to and how, matter. If agricultural land is involved in any way in your plans as a non resident, treat it as a specialist question and confirm the current position before acting. Our guide to checking whether land is agricultural or converted is a useful starting point on land classification.

Allowed or not allowed: a quick reference

The rules become much clearer when set out by property type. The table below summarises what a non resident may and may not buy under the foreign exchange framework.

How should an NRI approach a property purchase?

An NRI should approach a purchase by confirming the property type and the funding route first, then running the same diligence any careful buyer would. The foreign exchange rules add a layer, but they do not replace the ordinary checks. Work through this checklist.

1. Confirm the property is residential or commercial, not agricultural land, a plantation, or a farmhouse.
2. Plan the payment through proper banking channels, such as an NRE, NRO, or FCNR account.
3. Run the usual title, encumbrance, and approval checks exactly as a resident buyer would.
4. Verify the project on the relevant RERA register if it is an under construction flat.
5. Keep clean records of how the purchase was funded through your accounts.
6. If agricultural land features in any way, treat it as a specialist question and take advice.
7. Confirm the current foreign exchange position, since rules can be updated over time.

If a deal requires you to bend any of these rules to make it work, treat that as a reason to step back rather than proceed.

What should buyers on both sides remember?

For a non resident buyer, the thing to remember is that the door to residential and commercial property is wide open, while the door to farm land is firmly shut. Staying on the right side of that line, and funding the purchase properly, keeps an otherwise ordinary transaction clean. The prohibition is not a hurdle to be negotiated but a rule to be respected, given how serious the penalties can be.

For a resident buyer, the same rules matter from the other direction, since you may one day buy from or sell to a non resident. Knowing that an NRI cannot buy agricultural land, and that a sale from a non resident carries its own tax rules, helps both sides structure a clean deal. Our guide to TDS when buying from an NRI seller covers the tax side that often sits alongside these foreign exchange questions.

Frequently asked questions

Can an NRI buy a flat in Bengaluru?

Yes. Under the foreign exchange framework, a non resident Indian or an overseas citizen of India can buy residential property in India freely, with no special RBI permission and no cap on the number of homes, paying through proper banking channels. So an NRI can buy an apartment in Bengaluru much like any other buyer, subject to the usual diligence.

Can an NRI buy agricultural land in India?

No. A non resident Indian or an overseas citizen of India cannot purchase agricultural land, plantation property, or a farmhouse in India. This is a flat prohibition under the foreign exchange rules, regardless of the funds used. A breach can void the purchase and attract heavy penalties, so a non resident should stay within residential and commercial property.

How should an NRI pay for a property in India?

Through proper banking channels, typically funds routed via an NRE, NRO, or FCNR account, or otherwise through permitted banking channels, rather than informal or cash arrangements. Using the correct payment route is part of keeping the purchase compliant, so an NRI buyer should plan the funding with their bank from the start and keep clear records.

What if an NRI inherits agricultural land?

Inheritance is the main lawful way a non resident can hold agricultural land, even though they cannot buy it. However, dealing with it is limited, and inherited agricultural land generally has to be sold to a person resident in India. Because the rules are narrow and easy to get wrong, anyone in this position should take specialist advice before acting.

Last updated 2026-09-05. PropNewz Team.