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Project On INNOVATIVE BANKING SERVICES PROVIDED TO NRI
BACHELOR OF COMMERCE BANKING & INSURANCE SEMESTER V 2010-2011
Submitted By JINAL.M.MEHTA ROLL NO- 34
S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE & COMMERCE VIDYAVIHAR
CHAPTE R NO
• ACKNOWLEDGEMENT • EXECUTIVE SUMMARY • RESEARCH METHODOLOGY • OBJECTIVES OF THE STUDY • SCOPE OF STUDY
05 06 07 08 08 09 10 11 13 14 15 19
INTRODUCTION ON NRI BANKING:• Who is an Nri? • Pio card scheme • What is an OCB? • Key benefits • Types of accounts • Opening of NRI A/c
DEFINATION:• Definition of NRI – under Foreign Excange
• Defination of PIO
DEPOSITORY’S SCHME FOR NRI’S:2
NRI BANKING • NRE A/c • Types of Accounts • FCNR A/c • NRO A/c • Tax Benefits for NRI’s
30 30 34 36 41
SERVICES OFFERED BANK TO NRI’S:• Banking Services
43 44 45
• Services offered by ICICI Bank • Facility available as per RBI/FEMA
RBI ISSUES GUIDELINES FOR MONEY TRANSFER SCHEME:• Money transfer • International SWIFT transfer • Demand (or bankers) draft • UAE Exchange • Wester union Money Transfer • Sendwise • Moneygram send money online today • ICICI & HDFC bank NRI money transfer
48 49 49 50 50 50 51 52
NRI BANKING NRI INVESTMENTS:• • 52 55 Investment opportunities in India for NRI RBI forms 07 NRI INVESTMENT IN IMMOVABLE PROPERTY IN INDIA:• Rules for acquisition 7 transfer by foreign citizen NRI’s 56 • • Mode of payment Repatriation of sale proceeds 58 59 08 PAN CARD FOR NRIs:• Applying for pan card. necessity for pan 60 card.charges of pan card • Demat a/c 62 • CASE STUDY ON NRI • CONCLUSION • ANEXXURE • FINDINGS AND SUGGESTION • BIBLIOGRAPHY 66 70 71 72 74 4 .
who have right from the beginning encouraged me to do the project well. who has done me the corrections and formatting of project report and helped me by providing details and quotations of my topic.NRI BANKING ACKNOWLEDGEMENT First and Foremost I thank the ALMIGHTY for the Inspiration and strength to complete this project report successfully. who gave me a constant guidance valuable suggestions and inspiring encouragement to make my study a success. I consider it my proud privilege and immense pleasure working under the guidance of Ms Marelia Mam. I would firstly like to thank Prof. this helped me make my project very precise and accurate to a great extent On a personal note. My heartily thanks to Mrs. Mahek Mansuri the coordinator of my group and other faculties. My sincere thanks toms Ms Marelia Mam. I wish to thank my family members and friends for their constant support in helping me accomplish my mission 5 .Parvathy Venkatesh who has provided me the kind opportunity to do this project and to finish it in a successful manner.
000 for NRI. Bank should lower the minimum balance requirement which is Rs. should be reduced and in case of loan at a faster speed. Investment of NRI would help to bring more inflow of foreign exchange through taxes & investment policy & this would help Indian government to repay its debt to the World Bank. high yield on investments with manageable risk.NRI BANKING EXECUTIVE SUMMARY :NRI Banking is becoming popular among the Non-resident customers.1000.s as compared to resident who have to keep Rs.50. investing in any property. accurate & upto the standard as they have to face competition not only from the local banks but also from the banks based overseas. speed. for buying shares & debt. reasonable cost & quality services. This would help our economy to flourish & grow in future. Banks should try to give their top class service to the NRI’s as they are looking for convenience. As India is showing progress more & more NRI investing in the country. The services of banks should be fast. 6 . Banks should also extend their services by providing ATM’s abroad. E -banking with efficient facility & balance inquiry message through mobilizes. Indian government should give their best services & efforts to encourage NRI to invest in India. The documentation procedure in case of opening of a/c in banks.
These questions were discussed with our internal guides and our teaching faculty.NRI BANKING RESEARCH METHODOLOGY In order to conduct the research an appropriate methodology became necessary.Thus methodology relied on both primary and secondary data with the help of questionnaires. editing. books. They have provided valuable suggestions.The questionnaire was initially prepared in tough sketch at the first instance. In primary as well as secondary data were attempted to be this direction both collected. journals. observations as well as published work and unpublished work 7 . tabulating and in interpreting the required information for the research. discussions. and the relevant websites. The library of the college was of great help. additions deletions and modification of the rough questionnair Methodology became a preplanned strategy in collecting. The methodology for collecting data with reference to the secondary data was taken from the different published articles.
SCOPE OF STUDY:The scope of the study is to extended the knowledge about the nri banking services provided by banks but restricted to only ICICI Bank.NRI BANKING OBJECTIVE OF THE STUDY To get an overview of NRI BANKING SERVICES To analyze the growth of NRI banking services To study the innovative concepts emerging in the banking industry for NRI’s To observe the facility provided to NRI by Indian banks To analyse the response of the NRI given to the computerization & new invention in an Indian banks. TIME FRAME :. 8 .ICICI ( Industrial Credit and Investment Corporation of India) bank Andheri branch.In the vicinity of Mumbai (India) services for NRI by banks BRANCH :. AREA :.Aug 20th 2010 TO SEP 24th 2010.
INTRODUCTION NRI Banking – An Introduction:As per RBI guidelines. The funds held in Non-Resident (External) Accounts (NRE Accounts) qualify for certain benefits like exemptions from taxes in India. free repatriation facilities. in the event of his stay abroad being more than 183 days. 9 . the residential status of an Indian changes to that of the Non-Resident. It is mandatory to inform the bank of your change of your residential status.NRI BANKING CHAPTER 1. With a view to attract the savings and other remittance into India through banking channels from the person of Indian Nationality / Origin who are residing abroad and bolster the balance of payment position. This period of 183 days is not applicable in certain cases like going overseas for employment or business. NRI banking facilities are available to NRIs and PIOs. the Government of India introduced in 1970 Non-Resident(External) Account Rules which are governed by the Exchange Control Regulations. etc.
business or on any vocation is a Non-Resident. earnings. An individual will also be considered NRI if his stay in India is less than 182 days during the preceding financial year. the Government of India introduced in 1970 Non-Resident (External) Account Rules which are governed by the Exchange Control Regulations. investments and repatriation.NRI BANKING WHO IS A NON – RESIDENT INDIAN [NRI] ? A Non Resident Indian (NRI) as per FEMA 1999 is an Indian citizen or Foreign National of Indian Origin resident outside India for purposes of employment. persons posted in UN Organizations and Officials deputed by PSU on temporary assignments are also treated as Non-residents. carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period. "Non Resident Indian" (NRI) means an Indian citizen or a foreign citizen of Indian origin (excluding citizens of Bangladesh and Pakistan) residing outside India. Students studying abroad are also treated as NRIs. savings. Indian citizen who stays abroad for an indefinite period on employment. 10 . To meet the specific needs of non-resident Indians related to their remittances. Diplomats posted abroad.
Chennai) would do the same. the concerned Foreigners Regional Registration Officer (Delhi. Under this Scheme. Calcutta.NRI BANKING PIO CARD SHCEME The Government has launched a comprehensive Scheme for the Persons of Indian Origin-called the ‘PIO Card Scheme’. would be eligible. Persons of Indian Origin up to the fourth generation (great grandparents) settled throughout the world. or He/she is a spouse of a citizen of India or a person of Indian origin covered under (i) or (ii) above. Bangladesh and other countries as may be specified by the Central Government from time to time) if. 1935 and other territories that became part of India thereafter provided neither was at any time a citizen of any of the aforesaid countries (as referred to in 2(b) above). which will have a validity of 20 years. He/she at any time held an Indian passport. The Card would be issued to eligible applicants through the concerned Indian Embassies/High Commissions/Consulates and for those staying in India on a long term visa. unless the context otherwise requires"Person of Indian origin" means a foreign citizen (not being a citizen of Pakistan. Mumbai. The fee for the card. 11 . except for a few specified countries. would be US$1000. or He/she or either of his/her parents or grandparents or great grandparents was born in and permanently resident in India as defined in the Government of India Act. In this scheme.
State Governments and other Government agencies. transfer and disposal of immovable properties in India except of agricultural/plantation properties.NRI BANKING Besides making their journey back to their roots simpler. No requirement to register with the Foreigners Registration Officer if continuous stay does not exceed 180 days. this Scheme entitles the PIOs to a wide range of economic. If continuous stay exceeds 180 days. educational fields etc.including medical/engineering colleges. then registration is required to be done within a period of 30 days of the expiry of 180 days. These facilities ill include: Acquisition. Admission of children in educational institutions in India under the general category quota for NRIs. financial. Various housing schemes of Life Insurance Corporation of India. 12 . Parity with Non-Resident Indians in respect of facilities available to the latter in economic. they shall not enjoy political rights in India. holding. easier and smoother. financial. The benefits envisaged under the Scheme include: No requirement of visa to visit India. IIMs etc. However. educationaland cultural benefits. IITs. All future benefits that would be extended to NRIs would also be available to the PIO Card holders.
Investments in immovable properties in India. Investment in securities/shares of. societies and other corporate bodies which are owned. The various facilities granted to NRIs are also available with certain exceptions to OCBs so long as the ownership/beneficial interest held in them by NRIs continues to be at least 60% What are the various facilities available to NRIs/OCBs? NRIs/OCBs are granted the following facilities: Maintenance of bank accounts in India. and deposits with Indian firms/ companies. directly or indirectly. 13 . to the extent of at least 60% by individuals of Indian nationality or origin resident outside India as also overseas trusts in which at least 60% of the beneficial interest is irrevocably held by such persons.NRI BANKING What is an OCB? Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies. Such ownership interest should be actually held by them and not in te capacity as nominees. partnership firms.
authorization and freezing of AccountsTransaction entry and passing is made easy Provisions availed for issuing. Changing to RFC. Inventory. per directives from Head Office / RBI. Exchange rate and return reason details are also maintainedFavors opening. Preclosure. passing and stop payment of cheques. Hastens Deposit Receipt Printing. Currency. Interest rate and overdue interest rate details Masters. 14 .SB Interest Calculation. Supports Acceptance and Execution of standing instruction. Branch and holiday details Facilitates maintenance of Instrument. enabling the end user to make all changes with regard to Interest Rates or with regard to any changes Maintains as Bank. Aids Day Begin. Interest Payment & Overdue Process. The various modules render our NRI Banking solution offerings (which are stated below) in a seamlessly integrated fashion. Day End & Month End Processing Processes Quarterly. Renewal & overdue renewal of Deposits. Supports Account closure. The Masters module permits maximum parameterization to be done. and transfer to Inoperative & Half Yearly . Country.NRI BANKING KEY BENEFITS NRI-Banking follows a modular structure.
current. Banking Laws for NRIs allow for accounts with authorized dealers to be maintained in Indian rupees and in foreign currency. RFC A/c . As for 15 . While the FCNR (B) is a term deposit only. who require special permission from the RBI. Joint accounts of two or more non-residents and nomination facility are permitted. The financial budget for 2007-08 extends NRI accounts to regional rural banks (RRBs) as well.foreign currency non residential account. All NRIs can open such accounts. FCNR-B A/c .non resident ordinary account. Various accounts: NRE A/c . recurring or fixed deposit accounts. Some cooperative and commercial banks have also been specifically permitted to maintain NRI accounts in rupees even though they are not authorized dealers. Uttar Pradesh and Gujarat where a large number of persons from rural areas from these states are employed overseas. Kerala. This would boost remittances from NRIs particularly in Bihar. the NRE and NRO accounts can be operated as either savings.resident foreign currency account. with the exception of individuals residing in Pakistan and Bangladesh.non residential (external) rupee account.NRI BANKING Types of accounts NRI accounts are maintained by banks which hold authorized dealers' licences from the Reserve Bank of India. NRO A/c .
are USD 37. currently at 3.751 million and are expected to grow with regional rural banks also mopping up funds. funds remitted from outside India are credited to this account. Banks offer two types of accounts to NRIs. and should not exceed the LIBOR/SWAP rates. FCNR (B) and NRE are subject to a cap. Generally. and such investments are maintained in a Repatriable Demat account. for US dollar of corresponding maturity plus 50 basis points.NRI BANKING interest rates. Investments made from foreign funds can be repatriated overseas.5% apply to a period of 1 to 3 years. The interest rates on (NRE) Term deposits cannot be higher than LIBOR/SWAP rates as on the last working day of the previous month. In the case of NRO accounts. Non-Resident (External) Rupee (NRE) Accounts Both Principal and Interest can be repatriated/transferred out of India Savings rate on NRE accounts is at par with savings rates in resident accounts Term deposits can be made for 1 to 3 years. rates are determined by the banks. The total NRE/ FCNR deposits during 2006-2007. The change in interest rate also applies to NRE deposits renewed after their present maturity period. The interest rates. based on their reparability. Banks are expected to offer lucrative interest rates to bolster NRI funds. The interest rates on three year deposits also apply in case the maturity period exceeds three years. Repatriable Accounts Funds that can be transferred or repatriated abroad are maintained in a Non Resident External Bank account. 16 . as per RBI statistics.
Japanese Yen. interest. 17 .NRI BANKING FCNR (B) Accounts As in NRE accounts. deposits can be made in 6 specific foreign currencies (US Dollar.Fixed or floating within the limits of LIBOR/SWAP rates for the respective currency/corresponding term minus 25 basis points (except Japanese Yen). banks are allowed to determine their own interest rates. Interest rate. EURO. The term of deposits can range between 1 to5 years. Pound Sterling. rent from property in India. Presently. NRO Accounts Only current earnings are repatriable. Australian Dollar and Canadian Dollar). both principal and interest are repatriable. Savings NRO accounts are normally operated to credit rupee income from shares. In case of term deposits. etc.
recurring or term deposits. These funds are free from all restrictions as to their utilization or in investment in any form outside India. Proceeds of assets held outside India before their return to India can be credited to the RFC account. Non-Repatriable Accounts Non-repatriable funds are those which cannot be taken out of India. This limit includes the sale proceeds of immovable properties held by NRIs and PIOs. 18 . NRIs can also open NRO accounts for depositing their funds from local transactions. a Non Resident Ordinary Bank account. Resident Foreign Currency (RFC) Account NRIs and PIOs returning to India can maintain an RFC account with an authorized bank in India to transfer funds from their NRE/FCNR (B) accounts. These have to be maintained in a separate bank account i. Investments made from non-repatriable accounts cannot be repatriated but have to be maintained in a Non-Repatriable Demat account.e. his existing savings account is designated as a Non-resident Rupee (NRO) account. Non Resident Ordinary (NRO) Account When a resident becomes an NRI. saving. Money once transferred from an NRE account to an NRO account cannot be transferred back to an NRE account. The NRO accounts could be maintained in the nature of current.NRI BANKING Banks can allow remittance up to USD 1 million per financial year for bonafide purposes from balances in the NRO accounts once taxes are paid out.
Passport copy Visa/residence permit 2 photographs initial money remittance Your signature may be verified by anyone of the following. through the Authorized Dealer. Funds from NRO accounts are not repatriable or transferred to NRE accounts without the prior approval of the RBI. retired employees or non-resident widows of Indian citizens can remit. Foreign Nationals. NRIs. NRO accounts can be opened in the name of NRIs who have left India to take up employment or business temporarily or permanently in a foreign country.NRI BANKING The interest earned from NRO accounts is accountable to tax laws. Indian Embassy/consulate Any person known to the Bank Notary public Any of our offices abroad 19 . However. PIOs. up to USD one million per calendar year from the NRO account or from income from sale of assets in India OPENING OF NRI ACCOUNT HOW TO OPEN NRI ACCOUNTS WITH A BRANCH IN INDIA To open an NRE account please complete the account opening form and mail it to the branch of your choice along with .
20 . There is no ceiling on the amounts remitted for your credit in Non-Resident account. It is also free from Gift tax for one time gifting. However NRE term deposit will continue to earn same rate till maturity even after such conversion.NRI BANKING You can open NRE Saving Bank a/c / Current Accounts Fixed Deposits in Indian Rupees Fixed Deposits in Foreign Currency NRO accounts (Rupee accounts for crediting income in India ) You can authorize a resident to operate your account through a Power of Attorney or Letter of Authority Nomination Facility available (Nominee can be a resident Indian also) Procedures & Benefits: Non-Resident accounts can be opened along with your remittances through Banking channel. the NRE account will be automatically treated as Resident account. Loans against deposits are allowed for purposes other than investment up to 90% of the deposit. Photograph shall be enclosed with the opening form. NRE accounts earn more interest than domestic deposits. When the NRI depositor returns to India. The income from deposit is free from Indian Income Tax. Nomination facilities are available for registration in favor of a non resident or resident.
H1 Visa as work permit for USA or Hongkong ID card for residence of Hongkong) Separate proof of Non Resident status if the passport holds Indian address and resident Visa permit is not included in passport.NRI BANKING Documents Required:In case account opened in person: Indian passport with overseas resident address or work permit (i.e. Green Card as residence permit for USA. Photograph of individual account holder For persons employed with foreign shipping company Initial work contract Last wage slip For contract employees Last work contract Letter from local agent confirming next date of joining the foreign vessel (not more than six months from date of last return to India) Principal's overseas address or current work contract 21 .
Current Account – Rs.5.000/NRE – Term Deposit Account – Rs.000/NRO .000/FCNR – Term Deposit Account – USD 500/.5.10.10.000/NRE – Current Account – Rs.10.000/NRO – Term Deposit Account – Rs.NRI BANKING In case of documents sent by mail All the relevant above mentioned documents / signatures to be attested by any one of the following: Indian embassy overseas notary Local bank Minimum balance in which one can open an account (Differs from bank to bank):NRO – Saving Account – Rs.or its equivalent in GBP or Euro If you submit the money for opening/credit to an account. Frequency of Interest payment on accounts: NRO – Term Deposit Account – Half yearly NRE – Savings Account – Quarterly NRE – Term Deposit Account – Half yearly 22 .000/NRE – Savings Account – Rs.5.
NRI BANKING FCNR – Term Deposit Account – Quarterly Opening of JOINT ACCOUNTS:Type of account NRO NRE FCNR Joint Account with Resident Indians Yes No No Joint Account with Non-Resident Indians Yes Yes Yes 23 .
which has replaced the Foreign Exchange Regulation Act . 1961.2000.[FERA] with effect from June 1. being a person 24 . NRI definition. 1973. 1999 Definition of an NRI : Introduction: An Indian abroad is popularly known as an NRI – but the same has two important definitions . 1999 – [FEMA].under Foreign Exchange Management Act. • Person Residing Outside India is the term used for an NRI . FEMA definition: The most relevant definition concerning an NRI's various bank accounts and investments in movable and immovable properties in India is the one provided by Foreign Exchange Management Act.NRI BANKING CHAPTER 2.one coined under the Foreign Exchange Management Act. 1999 – [FEMA] and the other as per the Income Tax Act.
or for any other purpose.NRI BANKING who has gone out of India or who stays outside India for the purpose of employment or carrying on business or vocation outside India or any other circumstances which indicate his intention to stay outside India for an uncertain period. (a) any person or body corporate registered or incorporated in India. in either case— (a) for or on taking up employment outside India.1999 • Person resident in India" means— a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include— a person who has gone out of India or who stays outside India. (b) an office. or for carrying on in India a business or vocation in India. otherwise than— for or on taking up employment in India. in such circumstances as would indicate his intention to stay outside India for an uncertain period. or (c) for any other purpose. 25 . branch or agency in India owned or controlled by a person resident outside India. Section 2(v) of FEMA. • a person who has come to or stays in India. in either case. in such circumstances as would indicate his intention to stay in India for an uncertain period. or (b) for carrying on outside India a business or vocation outside India.
(Deposit) Regulations define a Person of Indian Origin (PIO) as: who at any time held an Indian Passport. Person of Indian Origin: • F. the phrase is for the first time defined in the regulations as “a person resident outside India who is either a citizen of India or a person of Indian Origin".E. or a spouse of an Indian citizen. being a citizen of any country other than Pakistan and Bangladesh. or a person. it can be summarized that both: • an Indian Citizen residing outside India and also a Foreign Citizen of Indian origin residing outside India are defined as NonResident Indians. or 26 . reading both the definitions together. • Non Resident Indian. 2(w) "person resident outside India" means a person who is not resident in India.NRI BANKING (c) an office. • Recently RBI has clarified that students studying abroad also be treated as NRIs under FEMA and accordingly be eligible for foreign investments and NRE/FCNR a/cs • And the definition of "a person resident outside India " is simply put as " a person who is not Resident in India.M. branch or agency outside India owned or controlled by a person resident in India. a person who himself or either of his parents or any of his grandparents were citizens of India." NOW.
Sri Lanka.NRI BANKING a spouse of a person covered under (i) or (ii) above. China. Probably with an intention of ensuring & restricting control of immovable properties in the hands of strictly defined persons of Indian Origin only. Bangladesh. As regards immovable property transactions it may be noted that herein the person's father or grandfather is included unlike parents or grandparents and spouse in earlier definition. Afghanistan. Accordingly a Person of Indian Origin is defined herein as: a) Who held an Indian Passport at any time? An individual other than citizens of Pakistan. Nepal and Bhutan. Sri Lanka. if he at any time held Indian passport. Bangladesh. China. this definition is further narrowed to exclude individuals being citizens of Pakistan. Nepal and Bhutan. 2(xii) 'Person of Indian Origin' means a citizen of any country other than Bangladesh or Pakistan. or 27 . Iran. Iran. 1955 (57 of 1955) or the person is a spouse of an Indian citizen or a person referred to in sub-clause • Person of Indian Origin (PIO) defined under Regulations re: Immovable Property in India: This definition is further narrowed when it comes to rules regarding acquisition and transfer of immovable property in India. Afghanistan. or he or either of his parents or any of his grand.parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act.
held Indian passport. 1999 definition has also incorporated an NRI's stay of 182 days or less during a year in India. Foreign Exchange Management Act. who (a) at any time. [Regulation 2(c) of F. Conditions of number of days stay in India:- No doubt.NRI BANKING b) Who himself or his father or grandfather was a citizen of India.E. an NRI settled abroad.M. (Acquisition and Transfer of Immovable Property in India) Regulation 2000] 2(c) 'a person of Indian origin' means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan). Stay in India during visits: The Act also lays down that such a person will continue to be an NRI during his visit/stay in India provided he has not returned to India for taking up employment or carrying on business or vacation or any other circumstances as would indicate his intention to stay in India for an uncertain period. but simply speaking if a person of Indian origin has gone out of India for settlement he is to be treated as an NRI irrespective of number of days he has stayed in India. OR (b) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act. 1955 (57 of 1955). Accordingly. irrespective of the number of days stay in India will continue to be an NRI during his visit to India provided he has not returned to 28 .
E. Conclusion: At the cost of repetition. society and other corporate body owned directly or indirectly to the extent of at least sixty per cent by Non-Resident Indians and includes overseas trust in which not less than sixty per cent beneficial interest is held by Nonresident Indians directly or indirectly but irrevocably. Partnership Firm.M.A. "Overseas Corporate Body" (OCB) means a Company. partnership firm. 29 . wherein 60 % or more ownership lies with NRIs or a Trust wherein 60 % or more financial interest is irrevocably held by NRIs. 2(xi) " Overseas Corporate Body (OCB)" means a company.NRI BANKING India for permanent settlement. Society etc.irrespective of the number of days of his stay in India or otherwise. it is once again said that an NRI permanently settled and residing outside India will continue to be treated as an NRI under F.
NRI BANKING CHAPTER 3 DEPOSITORY’ S Non-Resident (External) Account .NRE Account Eligibility - 30 .
Credits to an account. the travelers’ cheques/drafts are standing/endorsed in the name of the account holder and in the case of travelers’ cheques. Debits & Credits: Payments for local expenses and investments are allowed freely. Proceeds of foreign currency/bank notes tendered by account holder during his 31 . of funds emanating from a local source would be permissible only if the funds are of a repatriable nature. bank drafts payable in any permitted currency including instruments expressed in Indian rupees for which reimbursement will be received in foreign currency. Current. The account has to be opened by the Non Resident account holder himself and not by the holder of the power of attorney in India. Opening NRE accounts in the names of individuals/entities of Bangladesh/Pakistan nationality/ownership requires approval of RBI Types of Accounts . and they were issued outside India.NRI BANKING Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) can open and maintain NRE accounts with authorized dealers and with banks (including cooperative banks) authorized by the Reserve Bank of India (RBI) to maintain such accounts.Savings. Proceeds of personal cheques drawn by the account holder on his foreign currency account and of travelers cheques. deposited by the account holder in person during his temporary visit to India provided the authorized dealer/bank is satisfied that the account holder is still resident outside India. Recurring or Fixed Deposit accounts. Permitted Credits Proceeds of remittances to India can be in any permitted currency.
and (ii) the notes are tendered to the authorized dealer in person by the account holder himself and the authorized dealer is satisfied that account holder is a person resident outside India. Any other transaction if covered under general or special permission granted by the Reserve Bank. provided (i) the amount was declared on a Currency Declaration Form (CDF). the RBI imposed a restriction on loans against deposits and securities for NRIs to a maximum of up to Rs. Investment in shares/securities/commercial paper of an Indian company or for purchase of immovable property in India within prescribed regulations.as per the directives of the Reserve Bank of India.NRI BANKING temporary visit to India. Rate of Interest . where applicable. Loans against Security of Funds held in the Accou To the account holder i) For personal purposes or for carrying on business activities (except agricultural/plantation activities/investment in real estate business). Permitted Debits Local disbursements Remittances outside India Transfer to NRE/FCNR accounts of the account holder or any other person eligible to maintain such account. In January 2007. iii) For acquisition of flat/house in India for his own residential use. 20 lakh 32 . ii) For making direct investment in India on non-repatriation basis.
When one of the joint holder become residents. Loans outside India Authorized dealers may allow their overseas branches/correspondents to grant fund based and/or non-fund based facilities to Non Resident depositors against the security of funds held in the NRE accounts and also agree to remittance of funds from India if necessary. Opening of these accounts by a Non Resident jointly with a resident is not 33 . Repatriation of funds to Non Resident Nominee can be permitted by the authorized dealer or bank in the case of an account holder who is deceased. the authorized dealer may either delete his name or allow the account to continue as NRE account or redesignate the account as resident account at the option of the account holders. Change of Resident Status of Account Holder NRE Accounts should be re designated as resident account or the funds held in these accounts may be transferred to the Resident Foreign Currency (RFC) Accounts (if the account holder is eligible for maintaining RFC Account) at the option of the account holder immediately upon the return of the account holder to India (except where the account holder is on a short visit to India).NRI BANKING To third parties The loan should be utilized for personal purposes or for carrying on business activities (other than agricultural/plantation activities/real estate business). for liquidation of debts. The loan should not be utilized for re-lending.in the names of two or more Non Resident individuals may be opened provided all the account holders are persons of Indian nationality or origin. Other Features Joint Accounts .
The Power of Attorney (POA) holder cannot credit proceeds of foreign currency notes/bank notes and travellers cheques to the NRE accounts. Foreign Currency (Non-Resident Indians) FCNR (B) Account Eligibility to Open and Maintain FCNR A/c With the exception of persons of Indian origin from Bangladesh and Pakistan. make gifts from NRE accounts. Remittances should be in the designated currency. however.NRI BANKING permissible. all NRIs and PIOs are eligible to maintain an FCNR account with an authorised bank in India. In cases where the account holder or a bank designated by him has been granted permission by Reserve Bank to make investments in India. existing NRE/ FCNR accounts. Conversion to currency other than the designated currency also permitted at the risk and cost of the remitter.Resident Power of Attorney holder can operate on the NRE accounts but only for local payments to be made on behalf of the account holder. the POA holder is permitted to operate the account to facilitate such investments. POA holders cannot. etc. Accounts may be opened with funds remitted from outside. 34 . Operation by Power of Attorney . An Account may be opened in the name of eligible NRI during his temporary visit to India.
The interest can be credited to a new FCNR (B) account or a NRE/NRO account. For permissible debits and credits. or transferred from an existing NRE/FCNR account. and LIBOR rates plus 50 basis points for deposits over a year. Japanese Yen and the Euro. from designated currency to rupees and vice versa. Banks are also free to decide on a fixed or a floating rate of interest on FCNR term deposits. in a time range of 6 months to 3 years. Only term deposits can be maintained in FCNR accounts. the same conditions as the 35 . The account holder can choose the periodicity of interest. banks are free to offer interest on FCNR deposits below LIBOR rates. Deutsche Mark. USD. Conversion to another designated currency is permitted at a cost to the account holder. Funds from the FCNR account are allowed to move within the country at no extra cost to the account holder. from half-yearly to annual payments. For loans and overdrafts against FCNR accounts. FCNR accounts can be opened with designated currencies. less 25 basis points for deposits between 6 months to one year. the day’s rate of conversion will apply. For conversion of currencies. the regulations for FCNR accounts are similar to the NRE accounts. Interest rates are reviewed periodically and determined by directives from the Reserve Bank (Department of Banking Operations and Development). As per RBI guidelines.NRI BANKING Features of FCNR Account The account can be opened with funds remitted from abroad. which are: GBP.
The RBI guidelines prevail on these terms. However. Other Features Reserve Bank will not provide foreign exchange guarantee. The RBI does not provide any guarantee on foreign exchange. except for interest rates and reserve requirements of FCNR deposits. no interest is paid on deposits held for less than 6 months. these accounts are converted to either an RFC account or the Resident Rupee Deposit account. the same conditions as those for NRE accounts apply. Lending of resources mobilized by authorized dealers under these accounts are 36 . issued as and when required. In case of premature withdrawal of the FCNR Term Deposit.NRI BANKING NRE accounts apply. For repatriation of funds from the FCNR account. On maturity. a penalty is levied. and a penalty would have to be paid as per directives from the apex bank. the same rules as those for NRE accounts apply to FCNR deposits too. FCNR A/c after Change in Resident Status NRI deposits such as the FCNR can continue till the maturity date at the contracted rate of interest even after the account holder’s resident status changes to resident Indian. these accounts are treated as resident accounts effective from the account holder’s date of return to India. Interest paid on the account is calculated at a 1% below the committed rate if accounts are closed prematurely. However. As for joint accounts.
Individuals or entities of Bangladeshi or Pakistani nationality or ownership require approval from the RBI. Types of Accounts NRO accounts can be opened as current. Any freely convertible foreign currency can be deposited into the account during the account holder's visit to India.or its equivalent in the form of cash has to be supported by a Currency Declaration 37 . The RBI determines the rate of interest on these accounts and issues guidelines for opening. Foreign currency exceeding USD 5000/. recurring or fixed deposit accounts. savings. Joint Accounts with Residents/Non-residents Joint accounts are permitted with resident and non-residents. Non-Resident Ordinary Rupee (NRO) Account Eligibility Any person or entity residing outside India is entitled to open a NRO account with an authorised dealer or an authorised bank for transactions conducted in Indian Rupees. Permissible Credits/Debits Credits Remittances from outside India through normal banking channels received in - freely convertible foreign currency. operating and maintaining them.NRI BANKING not subject to any interest rate stipulations.
NRI BANKING Form. pension. out of balances held in the NRO account which could be acquired from the sale proceeds of assets acquired in India out of rupee or foreign currency funds or by way of inheritance from a resident Indian. such as rent. per calendar year. Remittance of Assets NRIs and PIO may remit upto USD One million per calendar year. dividend. Even proceeds from sale of assets including immovable property acquired out of rupee or foreign currency funds or through inheritance. provided: Assets acquired in India out of rupee/foreign currency funds (a) Immovable property: NRIs and PIO may remit sale proceeds of immovable property purchased by them when they were resident or out of Rupee as NRI or PIO. Repatriation up to USD One million. if they are funds brought from outside India. interest etc. dividend. pension or interest. Current income earned in India. Rupee funds must be supported by an Encashment Certificate. Debits All payments towards expenses and investments in India Payment outside India of current income like rent. in India of the account holder. for all bonafide purposes with the approval of the authorised dealer. funds 38 .
Bangladesh. Remittance of sale proceeds from other financial assets is not extended to citizens of Pakistan. The 39 . Bangladesh. Iran. Foreign Nationals of non-Indian origin on a visit to India Foreign nationals of non-Indian origin are permitted to open a NRO account (current/savings) on their visit to India with funds remitted from outside India through normal banking channels or by foreign exchange brought to India. Nepal or Bhutan and who has retired as an employee in India. Afghanistan. No lock-in period applies here if the authorised dealer is satisfied that the proceeds are from inherited property. Restrictions The above facility of repatriation from sale of immovable property is not extended to citizens of Pakistan. Nepal and Bhutan.NRI BANKING (b) Other financial assets: There is no lock-in period for remittance of sale proceeds of other financial assets Assets acquired by way of inheritance: Sale proceeds of assets acquired through inheritance can be remitted. Nepal and Bhutan. Bangladesh. Remittance of assets out of NRO account by a person resident outside India other than NRI/PIO A foreign national who is not a citizen of Pakistan. China. or is a widow residing outside India and has inherited assets of her deceased husband who was a resident Indian can remit upto USD one million per calendar year on production of documentary evidence to support the acquisition by way of inheritance or legacy of assets to the authorised dealer. Sri Lanka. has inherited assets from a resident Indian.
the resident accounts do not change to NRO accounts. his existing account is designated as a Non-Resident (Ordinary) Account.NRI BANKING balance in the NRO account is converted by the bank into foreign currency for payment to the account holder when he leaves India. provided the account was maintained for less than six months. The account should not be credited with any local funds during the term. except in the case of persons shifting to Bhutan and Nepal. Grant of Loans/ Overdrafts by Authorised Dealers/ Bank to Account Holders and Third parties Loans to NRI account holders and to third parties is granted in Indian Rupees by authorized dealers (banks) against the security of fixed deposits provided: The loans are utilized only for meeting the borrower's personal requirements or for business and not for agricultural/plantation /real estate or relending activities RBI regulations pertaining to margin and rate of interest will apply All norms and considerations which apply to loans to trade and industry will apply to loans and facilities granted to third parties. The authorized dealer/bank may allow an overdraft to the account holder subject to his commercial discretion and compliance with the interest rate directives. For the latter. (b) From Non-Resident to Resident 40 . Change of Resident Status of Account holder (a) From Resident to Non-resident When a resident Indian leaves India for taking up employment or for carrying on business outside India. except for interest accrued on it.
NRO accounts may be re-designated as resident rupee accounts once the account holder returns to India for taking up employment, or for carrying on business or for any other purpose indicating his objective to stay in India for an uncertain period. Where the account holder is only on a temporary visit to India, the account continues to be treated as non-resident during the visit. Treatment of Loans/ Overdrafts in the Event of Change in the Resident Status of the Borrower In case of a resident Indian who had availed of loan or overdraft facilities while resident in India and who subsequently becomes a NRI, the authorised dealer may at its discretion allow the loan facility to continue. In this case, payment of interest and repayment of loan may be made by inward remittance or out of bonafide resources in India.
funds to Non-resident/Resident Nominee
The amount payable to a non-resident nominee from the NRO account of a deceased account holder is credited to the NRO account of the nominee. Facilities to a person going abroad for studies Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities enjoyed by NRIs. All loans availed of by them as residents in India will continue to be extended as per FEMA regulations.
International Credit Cards Authorized dealers are allowed to issue International Credit Cards to NRIs and PIO, without the permission of the RBI. Such transactions can be made by inward remittance or out of balances held in the cardholder's FCNR/NRE/NRO Accounts. Income Tax The remittances, after payment of tax are allowed to be made by the authorized dealers on production of a statement by the remitter and a Certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India
TAX BENEFITS for NRIs
Interest on NRE & FCNR deposits are free of income tax. Tax @ 30% will be deducted at source on all interest income in NRO accounts. On permanent return to India, income on all investments out of foreign exchange funds would be eligible for a flat tax rate of 20% (excluding surcharge) till maturity of the investments.
CHAPTER 4 SERVICES OFFERED BY VARIOUS BANK TO NRI’S
BANKING SERVICES NRI banking services including deposits, savings accounts, finance like home loans, personal loans etc. Various banks like ICICI Bank, Citibank, HDFC Bank
Kerala.P. we believe in providing you with the most competitive returns on your hard earned money.NRI BANKING and many other nationalized and private banks that hold authorized dealer's licenses from the Reserve Bank of India (RBI) provide remittances. and Gujarat where a large chunk of the rural population have settled abroad. U. Many banks also offer Demat account services to the NRI's that enable NRI's online stock investment and share trading services. convenient and economical fund remit to India. Special NRI credit cards acceptable globally are available with various banks. These specialized services and banking accounts have drawn enormous NRI funds to India. These include: Online remittance services Remittance of funds to partner exchange houses in India Telegraphic or wire transfer Fund transfer through cheques/ DD's and Travelers' cheques. Another FDI (Foreign Direct Investment) magnet has been the various money transfer services provided. Various banks provide quick. Besides the major commercial banks. certain cooperative and regional rural banks (RRB's) have also been specifically permitted to maintain NRI accounts. This would increase NRI remittances in Bihar. investments and repatriation services. The banks also offer finance services to the NRI's that cover home loans for buying new residential property. Now you can earn even higher 44 . savings. SERVICE OFFERED BY ICICI BANK:Rupee plus plan :. earnings.At ICICI Bank. housing renovation loans for constructing or modifying on the existing properties. personal loans and other loan products.
NRI BANKING returns on your deposits by investing in Rupee plus plan. This FCNR earns interest as per prevailing FCNR interest rates. Rupee plus plan advantage :. at the time of booking the FCNR a Forward Agreement is also drawn to exchange the maturity amount of USD to Rupees at a given rate (Forward Rate).on a average the returns are significantly higher compared to putting your money in NRE FD as per the prevailing market rates. Additionally. Returns in rupee terms are assured once the deal is booked irrespective of the future movements in currency markets. Currencies :. In Rupee plus plan we have devised a way to make your money work harder and smarter and earn higher returns in terms of NRI as compared to a NRE FD.USD 25.for 1 year only. is nearly same across banks. which will be converted to USD (if not in USD already).000 or equivalent.you can being funds in any convertible currency. the money is put in USD denominated FCNR. 45 . Tenor: . What does the Rupee plus plan offer you :.NRE-FD interest rates rate being regulated by RBI. as per the current RBI/FEMA guidelines. The following banking facilities are available to NRIs. How does the Rupee plus plan work? Instead of putting the money in NRE FD directly. Minimum Deposit :.
Fixed Deposit Deposit Rate of interest on Rate of interest on domestic savings domestic savings Rate of Interest Subject to cap: LIBOR minus 25 46 . Canadian Repatriability Type of Account Dollar Repatriable Repatriable Non-repatriable* Term Deposit only Savings. Jap. Yen or Euro. Current. Fixed Recurring. Savings. Australian Dollar. Current. Recurring. US Indian Rupees account is denominated Dollar.NRI BANKING Foreign Currency Non-Resident (Non-Resident) Particulars Account (Banks) Account) NRIs/PIOs Account Account) NRIs/PIOs (Non-Resident Account Scheme(NRO Account) Any person resident outside India (other than a person resident in Nepal and Bhutan) May be held jointly (External) Rupee Ordinary Rupee Scheme(FCNR(B) Scheme(NRE Who can open an account Joint account In the names of two In the names of or NRIs two or more NRIs with residents Nomination Permitted Permitted Permitted Indian Rupees Currency in which Pound Sterling.
the rates rates can be fixed by can be fixed by banks subject to by RBI banks subject to ceilings prescribed ceilings prescribed by RBI Tax Aspects Interest income tax Interest income tax Interest income free and no tax free and no tax source. DTAA benefit may be available subject to fulfillment of conditions. taxable and liable for TDS @30% plus applicable surcharge subject to conditions. For Fixed Fixed Deposits. the Deposits.NRI BANKING basis points except account will also account will also be in case of Japanese be applicable to Yen where the cap NRE savings at the prevailing LIBOR rates applicable to NRO savings account. deduction at source. deduction at 47 . For would be based on account.
NRI BANKING CHAPTER 5 RBI issues guidelines for money transfer scheme 48 .
Drafts in Indian rupees can be purchased from exchange companies of one country and mailed to the branch of another country where the customer has the account. E-Transfer is completely online. which enables you to send money easily to any bank which is part of the SWIFT network. paperless money transfer service which enables the customer to send money directly from one bank account in foreign country to India.NRI BANKING MONEY TRANSFER Money can be transferred either through on line or drafts or telegraphically or by wire transfer or Cheques. quick and efficient method of transferring funds. There is no charge when you make a transfer from your Barclays NRI account in India to a Barclays account in UK or UAE. International SWIFT Transfer This is a secure. There is a flat-rate charge of Rs 500 for each SWIFT transfer made from your account. 49 . Telegraphic or wire transfers can be made through branch to branch. Cheques can be deposited for credit of the customer’s accounts and the Cheques will be collected and credited to their accounts.
With an extensive network of branches in UAE and a global presence in Australia.000 sent (minimum charge Rs 100). UAE EXCHANGE PROVIDING speed. who will then be able to take the Draft into their bank – following presentation of this Draft. Kuwait. he/she will then receive payment. the Xpress Money Service of UAE Exchange company is proving to be a modern and reliable way of sending and receiving money from anywhere in the world. UK.5 per Rs 1. A Demand Draft made payable to a Barclays account and a Foreign currency DD will incur a flat-rate charge of Rs 300. Qatar. 50 . Oman.NRI BANKING Demand (or Banker's) Draft This is a means of initiating a transfer from your account to a named payee. convenience and security of transactions. You can send the Demand Draft to your intended payee. especially among the immigrant Indian in Gulf countries. India. A Demand Draft made payable to a non-Barclays account will incur a charge of Rs 3. USA.
Send money online or at a moneygram agent location near you. Sri Lanka and Bangladesh. with a history of pioneering dating back more than 150 years. Non-resident Indians can now transfer their funds to India through the Money Transfer Service offered by Western Union. Not only is sending money with moneygram safe and convenient. you’ll find the same day services to be one fastest way to send your money online-usually arriving within minutes. Moneygram is a global leader in international 51 .000 remittances a month. in more than 170 countries. UAE Exchange and Financial Services Ltd makes 80. the UAE Exchange Centre specializes in Fund Transfer across the globe and enjoys a numerous uno status in the industry. "Credits to NRE/FCNR accounts are not permitted to be routed through Money Transfer Service Scheme (MTSS)" SENDWISE:A rupee demand draft delivered to the recipient’s doorstep within three to four working days and can be encashed at any nationalized bank in India.NRI BANKING Fiji. This service is currently available for inward remittances in India. The average amount of remittances per transfer is Rs 1.000.000 moneygram agent locations. Western Union Money Transfer Western Union is a global leader in money transfer services. MONEYGRAM Send money online today:You can send money around the world online to over 84.25.
We help people and business by providing affordable. FCNR deposits. Fixed Deposit. NRE Accounts. reliable and convenient payment services.S. ICICI Bank NRI Money Transfer:ICICI Bank. 52 .NRI BANKING money transfers and the largest processor of money orders in the U. the leading bank in India offering financial services to the NRI community through NRI saving account. and the quickest way to send money online to India.
Investment.. the following investment opportunities are open to you: 53 . through the RBI route and also through the Government route.e. Various investment opportunities in India available to NRIs: If one is NRI. 16% cap on dividend repatriation. which has a 3 year lock-in period on original investment and. except in the case of real estate. with respect to investment by NRIs and OCBs in India. such investment are allowed. are fully repatriable. i.NRI BANKING CHAPTER 6 NRI INVESTMENTS The Government of India has adopted a liberal policy. both. through the Foreign Investment Promotion Board (FIPB) NRIs and OCBs are permitted to invest up to 100% equity in real estate development activity and civil aviation sectors. made by the NRIs and OCBs.
housing and real estate development companies. Investment in securities/shares and deposits of Indian firms/companies..NRI BANKING Maintenance of bank accounts in India. investment limits for an individual NRI has been revised upwards from 1% to 5%. Investment in mutual funds in India. etc. Some of the investment schemes presently available to Nonresident Indians (NRIs) include the facility to invest upto 100 percent equity with full benefits of repatriation of capital invested and income accruing thereon in high priority industries mentioned in the Annexure-III to the industrial policy 1991. Investment Policy for Non-resident Indians (NRIs):Recognizing the investment potential of the Non-resident Indians. aggregate portfolio investment limits by all NRIs increased from 55 to 10% of the issued and paid-up capital of the company. In terms of the relaxations announced in 1998-99. NRIs/PIOs/OCBs are also permitted to make portfolio investments through secondary markets. FOR NRI’S INVESTMENT:In order to help the tax-payers to plan their Income-tax affairs well in advance and 54 . a number of steps are being taken by the government on an ongoing basis to attract from them in Indian companies. The aggregate investment limit would be separate and exclusive of FII portfolio investment limits. sick units under revival. 100 percent export oriented units.
conventional and non conventional routes of money transfer. A non-resident or certain categories of resident can obtain binding rulings from the Authority on any question of law or fact arising out of any transaction/proposed transactions which are relevant for the determination of this tax liability. Competition was not only from India based banks. a scheme of Advance Rulings has been introduced under the Income-Tax Act. with or without repatriation benefit provided the purchase is made through a stock exchange and also through designated branch of an authorized dealer. A major reason for this was that the Indian banking system was not a very preferred and trusted mode of investment for the NRI. reasonable costs and quality services – A face of India he could associate with. PORTFOLIO INVESTMENT NRIs/OCBs are permitted to make portfolio investment in shares/debentures (convertible and non-convertible) of Indian companies. high yield on investment with manageable risks. FACILITATION AGENCIES 55 .NRI BANKING to avoid long drawn and expensive litigation. speed. Authority for advance rulings has been constituted. The customer was looking for convenience. NRI’S INTEREST:NRIs invested only 5% of their investible assets in India with the balance being parked overseas. but also from local banks based overseas. NRIs/OCBs are required to designate only one branch authorized by Reserve Bank for this purpose. The tax-payer can obtain a binding ruling from the Authority on issues which could arise in the determination of his tax liability. 1961.
IPI Company/Individual (declaration) acquiring property 56 .NRI BANKING The main regulatory and facilitation agencies involved in the matters related to NRIs/OCBs investment are Reserve Bank of India (RBI). Authority for Advance Rulings (AAR). Ministry of Commerce and Industry. and Office of the Chief Commissioner (Investments & NRIs). RBI FORMS NRIs/OCBs/PIOs do not have to seek specific permission for approved activities covered under ‘General permission’ schemes. Secretariat for Industrial Assistance (SIA). The activities requiring Declaration/Permission along with corresponding forms are as under. Securities and Exchange Board of India (SWBI). The activities relating to NRIs/OCBs/PIOs not covered under those schemes either require declaration to RBI or permission from RBI. TS 1 Transfer of Shares/Debentures by Non-residents to Residents FNC Permission to establish a branch office in India by an Overseas Company 1 establishing a Representative Office by Overseas Company for Liaison Activities to open a Project/Site Office in India.
with repatriation of foreign exchange equivalent of cost of acquisition (maxi.NRI BANKING CHAPTER 7 NRI India Investment In Immovable Property In NRIs. Rules for Acquisition & Transfer by NRIs being: Indian citizen & Foreign citizen Mode of Payment Joint Holding / Restrictions Repatriation of Sale Proceeds Taxation of Capital Gains & Wealth-Tax 57 .houses) and no restrictions as regards holding period. irrespective of their citizenship can freely acquire and transfer residential as also commercial properties in India barring agricultural land and plantation. two in case of resi.
1973 or FEMA 1999. plantation or farm-house property from A person resident in India.e. Acquisition by way of Gift: General permission is granted to acquire any immovable property (other than agricultural land.NRI BANKING Rules for Acquisition & Transfer by Foreign Citizen NRIs Purchase / Acquisition: There is a general permission to acquire any immovable property (other than agricultural land.. i. provided the payment is made out of foreign exchange inward remittance or any Non Resident bank account in India. or A person resident outside India who may be an Indian citizen or foreign citizen of Indian origin provided such person had acquired said property in accordance with the provisions of Foreign Exchange Law in force at the time of acquisition. FERA. plantation or farmhouse property) by way of gift from a person (donor) who is A person resident in India. Acquisition by way of inheritance : General permission is granted for inheritance of immovable property including agricultural land. or Aperson resident outside India (an NRI )who is Indian citizen or foreign citizen of Indian origin. plantation or farm-house property) by way of purchase.NR(E). 58 .FCNR(B) or NRO a/c.e. i.
being: a) Non Resident External Account (NRE). Transfer of residential or commercial property by way of gift: General permission is granted to gift residential or commercial property to A person resident in India. Transfer of agricultural land.NRI BANKING Hence Agricultural land. plantation or farmhouse property way of inheritance only. b) Foreign Currency Non Resident (B) Account (FCNR) (B). Transfer / Sale: can be acquired by General permission is granted for sale of any immovable property (other than agricultural land. plantation or farmhouse property) to a person who is resident in India. or A person resident outside India who may be an Indian citizen or foreign citizen of Indian origin. or 59 . Mode of Payment : The payment for purchase of immovable properties is required to be made from NRI's bank account. plantation or farmhouse property by sale/ gift General permission is granted to sell or gift such property to a person who is resident in India and also an Indian citizen.
b) the purchase price was met out of Foreign Exchange Inward Remittance or NRE / FCNR (B ) account.NRI BANKING c) Non Resident Ordinary Account (NRO). banker’s certificate All incidental expenses such as stamp duty.[ vide notification no FEMA 65/2002 RB dated 29-06-02. 29-06-02.e. registration fees etc. It may be noted that the eligibility criteria of holding period of 3 years for repatriation is removed w. ‘73 or FEMA ‘99).f. FERA. should also be paid through bank only.e. the acquisition should be in accordance with the existing Foreign Exchange Laws (i. It is advisable to retain records of payment made i. or d) Foreign Exchange Inward Remittance from abroad. and c) in case of residential properties.e.]4 It may be noted that there are no restrictions as re: repatriation of sale proceeds 60 . Repatriation of Sale proceeds An NRI being an Indian citizen or a foreign citizen of Indian origin is allowed to repatriate the sale proceeds of an immovable property subject to the following conditions: a) . repatriation is restricted to a maximum of two properties.
The Permanent Account Number (PAN) is a combination of 10 alphanumeric 61 .NRI BANKING vis-a-vis number of commercial or industrial properties. it is mandatory to have a Permanent Account Number. CHAPTER 8 PAN Card for NRIs For all Indian citizens who are liable to pay tax under the Income Tax Act. The amount of repatriation is restricted to foreign exchange equivalent of the purchase price i. or are required to enter into financial transactions in India. 1961.e. profits / gains are not allowed to be repatriated.
The necessity for a PAN Card to NRIs Apart from income returns which must carry the PAN. The Department has entrusted UTI Investor Services Ltd. The PAN is allotted through e-mail on priority in 5 days as against the normal 15 days to the applicant upon online payment through a credit card.5 cms x 2. it is mandatory to submit the PAN in all financial transactions.intin.NRI BANKING numbers issued by the Income Tax Department.utiisl.co. payments for purchase of vehicles. (UTIISL) with the task of managing IT PAN Service Centers wherever the IT department has an office in the country. and pay tax on their Indian income. A “tatkal” or priority service has been provided for. For NRI’s. invest in stocks. The application for a PAN must be accompanied by: a recent colored photograph of size 3.com The forms care also available at the IT PAN Service Centers and TIN Facilitation Centers. like the purchase and sale of property in India. PAN is necessary to conduct monetary transactions in India. which is the application form for a PAN.000.gov.incometaxindia. Applying for a PAN Form 49A. The National Securities Depository Limited (NSDL) has also been engaged to allot PAN cards from TIN Facilitation centers.50. The PAN has lifetime validity.in & www. to enable speedy allotment of the PAN card through the Internet. foreign visits.5 cms on the application form . securing a telephone connection or making time deposits in a bank worth over Rs. can be downloaded from the Income Tax. 62 .nsdl. UTIISL and NDSL websites: www.
code of the concerned Assessing Officer of the IT Department obtainable from the IT office where form is submitted . DEMAT ACCOUNT :- 63 .NRI BANKING a proof of residence and identity (attested school leaving/matriculation certificate/degree/credit card/voter identity/ration/passport/driving license/telephone/electricity bill/employer certificate .
post. ensuring credit of a transaction to the account holder’s savings account by the third day.NRI BANKING A demat account facilitates buying and selling shares. secure and convenient mode of transacting in shares. precluding cumbersome paperwork and meaningless delays. Holding a demat account with a bank enables quick on-line dealings. and misplacement of certificates Prevents risks like forgery and counterfeit. Minimizes brokerage charges Ensures immediate liquidity Removes uncertainty on ownership title of securities Allows quick allotment of public issues Enables smooth process in pledging shares Avoids delays due to wrong/incorrect signatures. paperwork on transfer deeds Gives immediate benefits from bonus shares and stock splits Who offers Demat Facility? Depository Participants or DPs offer demat account services. theft or damage to documents Saves on stamp duty. which would include banks. Advantages of a Demat Account It is a safe. Banks have an added advantage over other DPs with their large network of branches. How to Open a Demat Account in India Fill up the demat account opening form at the nearest Depository Participant You may refer to either 64 .
Supporting documents to open a demat account Passport-size photograph Proof of identity. operated by several holders DPs charge a fee for switching shares from electronic to physical form and viceversa. which varies from a flat fee to a variable fee. Account holders are also subject to a service tax. retaining the same order of names Separate demat accounts have to be opened for different combinations of names in the case of three or more joint holders.cdslindia.co.jsp or NSDLathttps://nsdl.com/demat_acct/open_demat.NRI BANKING CDSLathttp://www. they are: account opening fee. Remat and demat charges may also show a discrepancy between DPs. Some DPs offer a discount to frequent traders.in/for the list of DPs in India. and its nature. an annual folio maintenance charge paid in advance. The charges on a demat account vary between DPs. Different DPs follow dissimilar methods of computing the capital gains. Any number of demat accounts and DPs are permitted A multiple-sign demat is feasible. It is advisable to maintain all demat accounts with the same DP to keep track of capital gains liabilities. No opening balance is required for a demat account. Some DPs may skip the account opening fee but charge a re-opening fee for the account. a monthly custodian fee. and a charge on transactions. Joint demat accounts can be opened. Broadly. which is determined by the period of holding. address and date of birth 65 . which may either be charged every month or as a flat fee per transaction.
which is repatriable. and a fresh account would have to be opened. he must inform his designated authorised dealer of his new status. Resident Indians can continue to hold non-repatriable demat accounts they hold even after they acquire non-resident Indian status. However. Repatriable and non-repatriable securities cannot be held in a single Demat account. No special permission from the RBI is required by NRIs to open a demat account. 66 . and the Portfolio Investment Scheme and Scheme for Investment which can be either repatriable or nonrepatriable. though specific cases may require authorization from the designated authorised dealers.NRI BANKING DP-client agreement on non-judicial stamp paper PAN Card The applicant receives an account number and a DP ID number which are required for all future communication with the DP. when a NRI returns to India permanently. NRI Demat Accounts NRIs need to fill in “NRI” in the type and “repatriable or “non-repatriable” in the sub-type on the form. NRIs require separate demat accounts for securities under the foreign direct investment (FDI) scheme. The securities held in the NRI Demat account would have to be transferred to the new resident demat account. The Demat account would have to be linked with the NRI’s NRO account for non-repatriable accounts and NRE accounts for repatriable accounts to credit dividends and interest. and the NRI Demat account closed.
67 . investments in India are usually linked to inheritance or savings made before shifting abroad The task we are entrusted with is to help such individuals plan their finances. Here's how we assisted one such family. Usually such individuals have a significant portion of their assets in the foreign country.NRI BANKING CASE STUDY ON NRI BANKING Increasingly at Personal we are meeting Indians living abroad who are relocating to India.
in US mutual funds and bonds. there is a likelihood that his daughter might want to go back to US for further studies Rajeev's investment details are as follows: His combined investment in stocks and funds in the US accounts for 50% of his net assets. Let's call this individual Rajeev. in our view. either in the US or in India. As mentioned earlier. it makes sense to shift his assets back to 68 . Almost all of rajeev's savings are in the US.NRI BANKING We recently met a Person of Indian Origin (PIO) who was based in the United States (US). and is certain to be here for the rest of his life. although he does expect to inherit some Indian assets over time. More about Rajeev - He is 44 years of age and was settled in US for many years before relocating to India He is married and has a 8-yr old daughter Although he is not sure. He has no exposure to India in his asset allocation. he has now shifted permanently to India. again in the US. Important to note that he does not own any residential property. Remaining 50% of his investments are in short-term deposits. since the client is now settled in India.
Keeping this in mind we proposed to conduct his entire financial planning exercise in two phases. and for this. Therefore.NRI BANKING India. Liquidation process: We first started with liquidation of his investments in US. and all your future incomes and expenses are going to be in Indian Rupees. From our perspective. The second phase involved. In order to reallocate his assets. if you know you are going to be in India. The first phase involved understanding of his needs in India and the US and accordingly liquidating his investments. This is not to say that no one should have money invested in other currency assets. why take on the risk of being invested in US Dollars? In case the US Dollar were to depreciate vis-a-vis the Rupee. demarcating his needs in India and US became the starting point for us. you should have that much money in another currency asset that is required to meet future needs (that need to be provided for in the other currency). investing the proceeds in India. one should evaluate such investment opportunities only when one has completed their investment plans for domestic assets. The next step was to decide the quantum of investment to be liquidated based on 69 . in his case. it gave us a good opportunity to define a welldiversified portfolio for him. Sanjeev will need to liquidate his assets in the US and transfer the proceeds to India. Why do we say that? Well. the liquidation and then allocation of assets must be based on his needs in India as well as in the US. the value of your US assets would effectively erode. Since his daughter might go back to US for higher education in future he will require money (US Dollars) at that point of time. Since the client has no prior investments in India. Importantly.
Sanjeev was keen to consider a higher exposure. and this holds true for most individuals. Normally. he has to continue with some of his investments for his daughter's future education. We found that around 10% of the client's total wealth will be sufficient for this purpose and rest he can liquidate. since the client is already settled in India. In US. Given the hype about property. however we recommended otherwise. people who have foreign currency (in this case US Dollar) get apprehensive about the exchange rate at which their proceeds are to be transferred.NRI BANKING his needs. the top priority was to invest in a property. Thus. The portfolio consisted of no more than six schemes. the number of properties you own should be linked to your 'real' needs i. Equities as an asset class are best equipped to generate high returns over longer 70 . About 40% of his assets were allocated for the purpose. The next step was to transfer the proceeds to India. In our view. we advised him not to pay much heed to the exchange rate and instead start transferring the funds. Asset allocation based on the client's needs in India: Given that the client has no investment in property (he was living in a rented premise). we advised him to liquidate 90% of his total investments in US. The fact that the client is financially very sound and in a position to take some risk. In this particular case. we recommended that he invest upto 35% of the surplus in well-managed diversified equity funds in a disciplined manner based on his needs and objectives.e. property which you need to give as inheritance or property for self use.
With India having one of the largest NRI populations and a very prosperous one too. his investment in equities should be well equipped to cater his future needs such as his daughter's marriage. Inclusion of debt funds in the portfolio will ensure that the portfolio becomes well diversified across asset classes. so a portion of his money will have to be shifted to lower risk assets.Rajeev was also advised to take up a term insurance policy for himself. First and foremost. Another 10% of the surplus cash inflows could be invested in debt funds (shortterm debt funds. he may not be comfortable with a higher allocation to equity. Rajeev's risk profile will change. This is necessary as over time. it is best for Rajeev that he engages the services of a professional and competent financial planner who can actively monitor his financial plan CONCLUSION NRI Banking today stands as one of the most profitable business for banks. his retirement planning or any other need as and when required. India needs 71 . buying property) and then the plan needs to be monitored regularly. Also the performance of the mutual fund schemes will have to be monitored. as he gets older. It goes without saying that our recommendation to Rajeev (although very critical) was just a starting point. as at present interest rates are on the rise).NRI BANKING time frames (3-5 years). it needs to be executed (investing in mutual funds. Given the nature of the task. NRI banking is one hot business no bank can afford to ignore today. Thus. The balance (5%) could be maintained in liquid assets for any immediate requirement or for contingency. This is a pure risk cover plan that enables the individual to opt for a high insurance cover at relatively lower premiums.
PRIMARY DATA QUESTIONARIES :VISITED ICICI BANK ANDGERI BRANCH MET MR. and the success of Pravasi Bharatiya Diwas.NRI BANKING foreign exchange reserves for its developing economy. banks are shaping up their strategies in order to attract this NRI money. prospects for NRI banking has never been so good than today. Further with India pushing for Capital Account Convertibility. KALPESH DHANJI MOTA 72 . Realizing this.
The minimum period for NRE and FCNR would be 1 year. 73 .NRI BANKING ANNEXURE :- • • Can I break my deposit before the maturity period? If I am visiting India. can I use travelers cheques or currency to open an account or credit my existing NRE Account? Can any person in India be authorised to operate the NRI's account? Can an FCNR deposit in one currency be converted to a deposit in another currency Can FCNR/NRE deposits be value dated? How much money can an NRI remit abroad annually from his NRO accounts? Can an NRI repatriate sale proceeds of his property purchased by him by remittance from abroad? What is the frequency of interest payment in an NRE savings account? What is the limit on the international ATM-cum-Debit card for NRI customers? What are the charges applicable for debit card? Can I repatriate money out of balances held in my NRO accounts? • • • • • • • • • FINDINGS & SUGGESTIONS :• Yes.deposits can be broken before the maturity period but the interest payable would be the applicable interest rate prevailing for that period at the time of opening the deposit.
000 or travellers cheques and notes exceed USD 10. and photo) may be handed over to the branch when the account is opened to authorise a person in India to operate the account.000 of cash withdrawal per 74 • • . • Yes. • • • Yes. A NRI can remit up to USD 1 million (or equivalent) per calendar year for any bonafide purpose subject to payment of tax and furnishing the required documents. • Yes. • Travelers cheques can be used to credit/open the account. Deposits are value dated. If you are bringing foreign currency notes & travellers cheques. you will have to submit a Currency Declaration Form (CDF) to the Customs authorities on arrival in India if the foreign currency notes exceed USD 5. • • Amount received in foreign exchange through normal banking channel The foreign currency equivalent as on date of payment of amount paid by debit to NRI a/c The frequency of interest payment would be half yearly. proof of address. However. You must produce the CDF for endorsement by the bank when you submit the money for opening/credit to an account. The mandate form duly completed (with Form 60 or PAN card.NRI BANKING A penalty charge as applicable will be levied. This is possible only in the case of savings accounts. proof of identity. The International ATM-cum-Debit card offers Rs 50.e.000. The date will be the date on which the funds are received by Barclays (India) in its Nostro accounts. However the amount repatriated should not exceed the amount paid for acquisition i. you may consider doing so only on maturity of the deposit so that there is no loss of interest. The mandate facility is available for NRI customers.
• There are no withdrawal charges for cash withdrawn from any VISA ATM network across the world.000 at merchant establishments. at all VISA enabled POS and ATM machines. In addition to this. • Interest earnings can be repatriated.36%) on these charges will be levied. Bibliography Website 75 . Service Tax (currently 12. kindly refer the schedule of charges for Consumer banking. For purchases and ATM transaction(s) outside India there is a 2.NRI BANKING day and transactions worth Rs 50.For details of charges on Domestic debit cards. remittance/s up to USD 1 million per calendar year from balances in NRO accounts subject to payment of applicable taxes is allowed.5% currency conversion charge.
com www.NRI BANKING • • • • www.com Books/Journal • • Nri Banking Articles in Newspapers Libraries referred • College library 76 . Google.google.com www.wikipedia.icici.com www.
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