RBI asks banks to draw up policy for property deals abroad

MUMBAI: The Reserve Bank of India directed banks to draft a policy for purchase, sale as well as acquiring or renting property overseas. "Banks should ensure that all the future transactions relating to purchase/sale of real estate as well as acquiring /letting out property on lease/rental basis at overseas centres are undertaken in accordance with the Board approved policy," said the RBI in a notification. These norms should also ensure compliance with all the applicable laws of the host country.

The directive comes after the central bank noticed that some Indian banks have committed certain lapses in purchase/sale of real estate as well as in acquiring/letting out property on lease/rental basis at some places in foreign countries. The RBI also said this policy should be compliant with the Foreign Exchange Management Act, 1999, Banking Regulation Act, 1949 and other relevant Indian laws. The banks have been asked to incorporate a suitable exit clause while renting or acquiring property overseas.