What's happened
Indian buyers in Dubai face regulatory risks when using international credit cards for property payments. Under Indian law, such transactions may violate the Reserve Bank of India’s rules, risking legal issues and financial penalties. Proper remittance through Indian banks remains the legal route.
What's behind the headline?
Regulatory Risks Outweigh Convenience
Using international credit cards to pay for Dubai property appears tempting due to low down payments and flexible instalments. However, this shortcut exposes Indian buyers to significant legal and financial risks. Payments made via credit cards bypass the RBI’s compliance framework, which includes declarations, forms, and taxes. Regulators can scrutinise these transactions later, potentially leading to violations of FEMA and other laws.
Financial and Reputational Consequences
Beyond legal issues, credit card payments for property are costly, with forex mark-ups, high interest rates, and late fees. Buyers risk losing money and facing difficulties in repatriating funds or reselling properties. Proper remittance through Indian banks, with all paperwork, remains the safest and most transparent method.
Broader Implications
This story highlights the tension between convenience and compliance in cross-border investments. As authorities tighten oversight, the temptation to cut corners will diminish. Buyers should prioritise legal routes to avoid future complications, especially as regulatory scrutiny increases globally. The message is clear: compliance is essential for sustainable, trouble-free property ownership abroad.
What the papers say
The articles from Gulf News and the NY Post provide contrasting perspectives. Gulf News emphasizes the legal risks Indian buyers face when using credit cards for overseas property payments, highlighting regulatory scrutiny and compliance issues. The NY Post, meanwhile, focuses on financial fraud and personal consequences, illustrating the importance of transparency and proper legal procedures. Both sources underscore the necessity of following official channels, though Gulf News offers a more detailed explanation of the regulatory framework, while the NY Post provides a cautionary tale about financial misconduct and its repercussions. Together, they reinforce the message that shortcuts in cross-border property transactions can lead to serious legal, financial, and reputational consequences.
How we got here
Indian residents are limited in how they can transfer funds abroad for investments like real estate, governed by the Reserve Bank of India’s Liberalised Remittance Scheme (LRS). Payments via credit cards for overseas property bypass official channels, risking violations of FEMA and other regulations. Authorities have increased scrutiny, and non-compliance can lead to legal and financial consequences.
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