Non-Resident Indian (NRI)

As per FEMA,  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) means “a citizen of any country other than Bangladesh or Pakistan who had:-

-at any time held Indian passport or

-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, 1955 or

-the person is a spouse of an Indian citizen or a person referred to in (a) or (b).”

NRI = PROI + Citizen of India/ PIO

Person Resident in India

A person residing in India for more than 182 days during the course of the preceding financial year but does not include -

(A) a person who has gone out of India or who stays outside India, for:-

(a) taking up employment outside India, or

(b) carrying on a business or vocation outside India,

(c) any other purpose, in such circumstances as would indicate his intention to stay outside India for

       an uncertain period;

(B) a person who has come to or stays in India, otherwise than-

(a) for or on taking up employment in India, or

(b) for carrying on in India a business or vocation in India, or

(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an

      uncertain period

NRI  DEPOSIT  ACCOUNTS

Non-Resident Ordinary (NRO) Account :-

-Residential status - NRI

-Resident accounts to be re-designated as NRO

-Any NRI/PIO can open by Inward remittance

-local receipts- rent/ interest/ dividend/pension (to the satisfaction of the AD bank.)

-sale proceeds of assets

Non-Resident External (NRE) Account:-           

-Residential status - NRI

-Funds of repatriable nature

-Foreign Inward remittances converted into Indian Reupee.

-Exchange fluctuation risk of the depositor.

Foreign Currency Non-Resident (Bank) Account (FCNR-B):-

-Residential status - NRI

-Funds of repatriable nature

-Foreign Inward remittances

-Depositor does not have Exchange fluctuation risk.

Resident Foreign Currency (RFC) Account :-

-Residential status – RI (having been NRI at least for 1 year)

-Funds of repatriable nature

-Foreign Inward remittances

Q.:-  Shri Kumar comes to India on a temporary visit. He wants to open FCNR(B) deposit for USD 25000/-. He tenders USD currency notes for  this purpose. He also has FCTC for USD 10000 with which he wants to open an NRE account.

Ans:-

-NRIs during their temporary visits to India can deposit FC Notes & FCTCs in their accounts as also open new accounts with FCN & FCTC.

-Bank to verify and ensure that FCN in excess of USD 5000,  FCTC in excess of USD 10000, FCN+FCTC in excess of USD 10000 are declared in CDF (Currency Declaration Form).

-Bank to ensure that the customer continues to be NRI.

-Pre closure of FCNB issued against FCN/FCTC will not be at TT buying rates.

Q:-  During his visit to India, Shri Kumar also wants to open a new NRO account jointly with his wife, by depositing INR 40000 in cash. Your Single window operator refuses to accept cash in INR as this is an NRI’s account.

Ans:  NRO account is meant for putting through bona fide transactions denominated in Indian Rupees, not involving any violation of the provisions of FEMA. Cash deposits can be accepted in this account, subject to satisfaction of the AD Bank. This includes current income like rent, dividend, pension, interest, etc.

Q:  After Shri Kumar left India, his brother comes to you with a PoA in his favour and seeks to open another NRE account in the name of Shri Kumar. He also tenders USD 5000 in currency notes which were given to him by Mr. Kumar for this purpose.

Ans:-

PoA holders can not open deposit accounts on behalf of NRIs

They can not also deposit FCN/FCTC into accounts of NRIs.

Q:           Mr. Trusty is working in Hong Kong. He has large NRI deposits with you, which are operated by Mr. Crooky, his brother under a power of attorney. Crooky visits the bank with the following requests.

He wants to transfer Rs 5 lacs into a new term deposit favouring Mr. Trusty.

Remit USD 2500, to Mr. Trusty in Hong Kong by SWIFT.

Remit USD 2500, to Mr. Con in Nigeria by SWIFT.

    Which of these  transactions will be permitted by you?

Ans:-

-PoA Holders can make permitted investments in the name of NRIs.

-They can make remittances favouring NRI depositors themselves

-They cannot make remittances favouring third parties

-They cannot make gifts even to resident third parties locally.

OPERATIONS BY POA HOLDERS

- Opening of accounts by PoA Holder  / deposit of FC Notes and FCTCs by PoA Holder not allowed.

WHAT IS PERMITTED ?

POA authority is restricted to:-

-Withdrawals for local payments and

-Remittance to the account holder himself under a specific power.

-Facilitate investments in India in case NRI is permitted to do the same.

WHAT IS NOT PERMITTED TO POA?

-repatriate funds held in accounts outside India for any other purpose

-make payment of gifts on behalf of the account holder

-transfer funds from the said account to another NRE account.

NOMINATION  FACILITIES

Nomination facility -  RI/ NRI Nominees depends on:-

-residential status of the nominee at the time of settlement

-Type of accounts held by the deceased NRI client.

-Resident nominee will get proceeds of deposits on non-repatriable basis.

-Non-Resident nominee can repatriate the deposits abroad.

Q: You get to know the sad news of demise of your NRI depositor Mr. Trusty. The nominee, Mr. Crooky, who is a resident Indian, refuses settlement in his favour, as the money is needed for settlement of Mr. trusty’s borrowings from Mr. Lender, a US Citizen. Documentary evidence of the borrowal transaction is also produced to you.

Ans:   Such requests from resident nominees can not be accepted by ADs. AD should direct the nominee to RBI for their approval.

Q:  Shri Kumar has returned to India after a two-year stint abroad. He wants to place his FCNR(B) deposit maturity proceeds in RFC deposits jointly with his wife on E or S style. Will you permit?

Ans:  RFC deposits can be held jointly by residents , who individually satisfy the residential status criteria for holding such accounts. ( RI having been NRI at least for one year)