As one travelling abroad and settling down, you will get a lot of access
to financial benefits. One of these includes opening the NRI account.
Unfortunately, the Indian government makes a multitude of rules for
NRI’s that regular citizens of India do not have to contend with. Many
NRI’s do not know about them and then get into trouble when they are
told. Avoid these problems, here is some information that can make you
aware:
1. Not changing resident savings account to an NRO account
It is a fact that NRIs are not allowed to hold a regular resident savings account. However, many of them still do unaware of this fact. It has been said by law that when an Indian citizen’s status changes to an NRI by FEMA rules, they have to convert their account to an NRI account, specifically, an NRO account. All incomes which you received in India, as well as all incomes you need to pay in India, have to be deposited into this account. You must also give the bank adequate notice that you are closing the resident savings account. Usually, the timeframe given for this is 3 months. You do however have the option to change the bank you have your account in. However, an NRO account has to be opened in the bank you are opening your new account in. An NRO account is repatriable. This means you can send the money you earn abroad back to the resident country.
2. Having a PPF account
A PPF account is another account which NRIs are not allowed to have but often keep. The rules for a PPF account which is already opened are extremely convoluted. The rules for these have changed a lot over the years but the current rules are that you can continue with your PPF account when you are an NRI but you have to withdraw the funds after maturity. However, it must also be noted that repatriation is also allowed from an NRO account and this makes even the PPF repatriable if you have followed the legal rules. It must further be noted that if your PPF is not matured then you can continue to keep your PPF in five-year blocks. This is termed as “extension without contribution”.
These are just some of the complications that NRIs have to face at first. It is crucial that you find a banker who knows the Indian system well and can advise you about the best possible way to proceed with the NRI account such as the NRO account as well as a PPF account.
1. Not changing resident savings account to an NRO account
It is a fact that NRIs are not allowed to hold a regular resident savings account. However, many of them still do unaware of this fact. It has been said by law that when an Indian citizen’s status changes to an NRI by FEMA rules, they have to convert their account to an NRI account, specifically, an NRO account. All incomes which you received in India, as well as all incomes you need to pay in India, have to be deposited into this account. You must also give the bank adequate notice that you are closing the resident savings account. Usually, the timeframe given for this is 3 months. You do however have the option to change the bank you have your account in. However, an NRO account has to be opened in the bank you are opening your new account in. An NRO account is repatriable. This means you can send the money you earn abroad back to the resident country.
2. Having a PPF account
A PPF account is another account which NRIs are not allowed to have but often keep. The rules for a PPF account which is already opened are extremely convoluted. The rules for these have changed a lot over the years but the current rules are that you can continue with your PPF account when you are an NRI but you have to withdraw the funds after maturity. However, it must also be noted that repatriation is also allowed from an NRO account and this makes even the PPF repatriable if you have followed the legal rules. It must further be noted that if your PPF is not matured then you can continue to keep your PPF in five-year blocks. This is termed as “extension without contribution”.
These are just some of the complications that NRIs have to face at first. It is crucial that you find a banker who knows the Indian system well and can advise you about the best possible way to proceed with the NRI account such as the NRO account as well as a PPF account.
