Non-Resident
Indian (NRI)
An
NRI means a person resident outside India who is a citizen of India or is a
person of Indian origin.
Person of Indian Origin (PIO)
PIO
is a citizen of any country other than Bangladesh or Pakistan, if
(a)he at any time held Indian
passport; or
(b)he or either of his parents or
any of his grandparents was a citizen of India by virtue of the Constitution of
India or the Citizenship Act; or
(c)the person is a spouse of an
Indian citizen or a person referred to in (a) or (b).
Eligibility
(a) Any person
resident outside India, may open and maintain NRO account with an Authorised
Dealer or an Authorised Bank for bona fide transactions in Indian Rupees.
(b) Opening of
accounts by individuals and entities of Pakistan and entities of Bangladesh requires
prior approval of the RBI.
(c) Opening of
accounts by individual of Bangladesh may be allowed, subject to his holding a
valid visa and valid residential permit.
Types of Accounts
Current,
savings, recurring or fixed deposit. The Rate of interest and guidelines shall
be in accordance with directives issued by RBI.
Joint Accounts with Residents /
Non- Residents
The accounts may be held jointly with
residents and non-residents.
Permissible Credits / Debits
A. Credits
(i)Remittances from abroad through normal
banking channels in permitted currencies.
(ii)
Freely
convertible foreign currency, tendered by the account holder during his
temporary visit. Cash exceeding USD 5000 or its equivalent should be supported
by currency declaration form. Rupee funds should be supported by encashment
certificate, if they represent foreign exchange.
(iii)
Transfers
from rupee accounts of non-resident banks.
(iv)
Legitimate
dues in India. This includes income like rent, dividend, pension, interest,
etc.
(v) Sale proceeds of
assets acquired out of rupee or foreign currency funds or through legacy or inheritance.
(vi)
Resident
individual can make a rupee gift to the NRO account of an NRI/PIO who is a
close relative subject to the amount being within the overall limit prescribed
under the Liberalised Remittance Scheme available for a resident individual.
(vii)
Resident
individual may lend to a NRI/PIO close relative, subject to the amount being within
the overall limit prescribed under the Liberalised Remittance Scheme available
for a resident individual;
B. Debits
(i) All local
payments in rupees including payments for investments in India.
(ii)
Remittance
of current income like rent, dividend, pension, interest, etc. outside India.
(iii)
Remittance
up to USD one million, per financial year (April- March).
(iv)
Transfer
to his NRE account within the overall ceiling of USD one million per financial
year.
Remittance of Assets
A
citizen of a foreign state, not being a citizen of Nepal or Bhutan or a Person
of Indian Origin (PIO), who –
(i)has retired from an employment in India,
or
(ii)
has
inherited assets; or
(iii)
is
a widow resident outside India and has inherited assets of her deceased husband
who was an Indian citizen resident in India,
may remit an
amount, not exceeding USD one million per financial year, on production of
documentary evidence in support of his ownership.
Foreign nationals of non-Indian
origin on a visit to India
NRO account can
be opened by a foreign national of non-Indian origin visiting India, with funds
remitted from outside India. The balance may be converted into foreign currency
and paid to him at the time of his departure from India. The account should not
be more than six months old and there should be not credit of local funds,
other than interest accrued.
For accounts
more than six months old, applications has to be made by the account holder to RBI.
Grant of loans / overdrafts by the Authorised Bank
to account holders and third parties
(a)
Loans to non-resident account holders and third parties may be granted in
Rupees against the security of fixed deposits subject to the following conditions:
(i)
The
loan shall be only for borrower's personal and business needs and not for agricultural
or real estate activities or for re-lending.
(ii)
Regulations
relating to margin and rate of interest shall be complied with.
(iii) The usual norms as
applicable in the case of advances to trade/industry shall be applicable for
such facilities granted to third parties.
(b) Authorised
Dealer may permit overdraft subject to their commercial judgement and other
directives.
Change of residential status of
account holder
(a) From Resident to Non-resident
(i)When a resident leaves
India for a country (other than Nepal or Bhutan) for taking up employment, business,
vocation or for any other purpose indicating his intention to stay outside
India for an uncertain period, his existing account should be designated as a
Non- Resident (Ordinary) Account.
(ii)
Foreign
nationals who become residents and are eligible to hold a resident savings bank
account are permitted to re-designate their resident account as NRO account on
leaving the country to enable them to receive their legitimate dues.
(b) From Non- resident to Resident
NRO accounts may
be re-designated as resident Rupee accounts on return to India for taking up
employment, business, vocation or for any other purpose indicating his
intention to stay in India for an uncertain period. Where the account holder is
only on a temporary visit to India, the account should continue to be treated
as non-resident during such visit.
Treatment of loans /overdrafts in the event of
change in the residential status of the borrower
Where a person has
availed a loan while residing in India and subsequently becomes a non resident,
the Authorised Dealer may allow continuance of the facilities
at their discretion. In such cases, repayment may be made by inward remittance
or out of his resources in India.
Payment of funds to Non-resident
nominee
The
amount payable to a non-resident nominee of a NRO account shall be credited to the
NRO account of the nominee with an Authorised dealer in India.
Operation of NRO account by Power
of Attorney holder
Authorized
Dealers may allow operations in an NRO account by a Power of Attorney holder
provided such operations are restricted to:
(i) All local payments
in Rupees including payments for eligible investments; and
(ii)
Remittance
of the NRI’s current income in india after taxes, outside India.
(iii)
The
resident Power of Attorney holder is not permitted to
· repatriate funds
other than to the non-resident himself
· make payment by
way of gift to a resident
· transfer funds to
another NRO account.
International Credit Cards
Authorised
Dealer banks have been permitted to issue International Credit Cards to NRIs/PIO,
without prior approval of Reserve Bank. Such transactions may be settled by
inward remittance or out of balances held in the cardholder’s FCNR (B) / NRE /
NRO Accounts.
Income-Tax
The
remittances (net of applicable taxes) will be allowed on production of
requisite information in prescribed formats. It shall be mandatory on the part
of Authorised Dealers to comply with the requirement of tax laws.
System of quarterly reporting of opening of NRO
accounts by individual/s of Bangladesh:
i. The Authorised
bank should put in place a system of quarterly reporting whereby each branch shall
maintain a record of the accounts opened by Bangladeshi nationals and details
of such account shall be forwarded to their Head Office which shall report to
the Under Secretary (Foreigners), Ministry of Home Affairs, on quarterly basis.
ii. The report shall
contain Name, Date of arrival in India, Passport No. and Place/Country of
issue, Residential permit reference and date and place of issue, Name of the
FRO/ FRRO concerned and the Complete address and contact number of the branch
where the bank account is being maintained.
Based on RBI Master Circular dt 01/07/15. Please visit www.rbi.org.in for any
further clarification if required….. Poppy
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