All you need to know about NRI accounts

There are a few different kinds of NRI accounts. Some banks offer the NRI bank accounts which have a number of features like you can withdraw Rs 40,000 from the ATM daily, you could enjoy personal banking benefits through specially designed account for the NRIs who do wish to get interest credited to their savings account.

There is also the option of multi-channel banking where through internet banking you could transfer funds, pay bills, view account summary in internet banking. Through mobile banking you could check balances transfer funds, request for cheque books and also you could make your utility bills payment using your mobile phone, you will also get SMS alerts and monthly e-statements and quarterly physical statements to keep a track on the bank transactions and other banking activities.

An NRI account would also get personalised cheque book every quarter. There is a host of other banking benefits and facilities, you could get special privileges on remittances from your relatives and friends abroad, you will also be able to keep a joint account, enjoy loyalty reward points.

You could also keep your assets safe, there are lost card liability and also purchase protection liability  up to a certain amount to protect against the fraudulent usage of the credit card, it could also be put to use during the damage or the loss of articles purchased with the debit card.

Along with that you also have the NRE savings account which can be opened by any person staying outside India. All the NRI’s who have an NRE account in India are given the permission to hold and maintain foreign currency earnings in Indian rupees. All the funds along with the accrued interest are freely repatriable and what’s more the interest that is earned is not taxable in India. The NRE account can be easily converted into a regular resident account with the relocation of the NRI back to India. The account is structured ina manner that is suitable for most people who are living abroad. He or she might be a professional who is deputed overseas or an entrepreneur moving all across the world to do his business. It is also very convenient to start off; you just need to submit a few documents to get started with your very own NRE account. There are lot many features that are for your benefit. Some features like low minimum balance requirement, tax advisory services, multi-city cheque books, online transaction options. There are all the features that are required by any Non-resident Indian to tactfully maintain their balances in India. Therefore it is very necessary to have an NRI account for any non-resident Indian.

How to save your funds as an NRI during the demonetization period

While the whole country has come to the terms of the demonetization move made by the government, NRI’s who have settled abroad around the world, are still dealing with the consequence of it. While the residents can still stand in line to exchange the demonetized notes for the approved ones, NRI’s are still figuring out ways and means to get rid of the old notes, from the approved sources and within the approved timeline. This has obviously risen to a stressful situation for most NRI’s abroad.

Given below are a few questions regarding NRI’s and answers related to the demonetization move.

How do NRI’s residing abroad exchange their old notes which aren’t valid any longer?

As per the government regulation, members would need to exchange their notes in India or authorise an individual to do it for them. However, at the moment, foreign branches of the Indian banks in both the public and private sector are not accepting any cash outside the country. If you are making a trip to India any time before the 30th December deadline, you can exchange or deposit your funds, in the appropriate NRI account, namely the NRO account. This is one of the NRI account benefits. If another individual is making the transfer on your behalf, you will need to make an authorization in writing, to enable the authorised individual to deposit the notes in the bank account in India. When the notes are being deposited, the authorised individual must present a valid identity proof to deposit the funds on your behalf. If the funds are with you abroad, you can send the funds across India through a trusted individual and make the deposit on your behalf.

Can NRI’s deposit all their cash in the appropriate NRI account?
NRI’s can deposit their funds, only in NRO account. This is part of the NRI account benefits for the NRO account, as only Indian currency can be deposited. However, if you are depositing an amount of Rs 2.5 lakh in the account, it will be reported to the tax department. It will then be matched with your income tax returns, wherein which, suitable action will be taken.

Can Indian residents who are travelling abroad exchange old denominations for the local currency if they have no source for exchange?

As mentioned previously, the notes can only be exchanged in the country. Therefore, those who are travelling abroad will need to wait to return home to India before they can exchange the notes. If you need to use funds, banking cards or traveller's cheques would be required to purchase local currency.

Can Indian currency be used in Nepal where it is used?

The Indian government had every right to demonetise its currencies. As of now, there is no official declaration about the status of the usage of Indian currency in Nepal. However, the government may take appropriate measures to ensure that currency that needs to be exchangedis done in the legal tender.
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How to open a NRI account from abroad

As a NRI whose settled abroad, has the opportunity to invest in various options back home. However, before investing in any of these options, the NRI must first open a NRI account. In this case, either the NRE account or the NRO account must be opened. Here is how you can open either account even though you are settled abroad.

Step 1 – Contact the bank

The first step you need to take is to contact the bank. You can either contact them through mail or call their helpline. Several of the major banking institutes also have a digital enquiry form which you can fill up, wherein which, a representative from the respective bank will call you back. Ensure that you talk to a representative from the bank and get the required details about the NRI account you would want to open.

Step 2 –Book an appointment to fill the account opening form

Once the necessary contact has been made with the bank representative and the information required, you will need to fill up the account opening form then. Normally the bank will provide you with the required paperwork through attachments or emails. Normally, it would take 20 minutes or less to fill up. However, it is best to book an appointment with the bank to get the required assistance to fill up the paperwork required. If you are unaware or unsure of any details within the form, you can leave it blank, until you get the required clarification.

Step 3 – Get your documents assembled in order
As the part of the loan application process, you will need to submit a certain set of documents. However, when filling up the form, you would not want to distract yourself, running around to get the required documents pertaining to the application form. To assist you in this step, you need,
• a copy of the first and last page of your passport
• a copy of the visa page on your passport
• proof of residence through documents such as your driver’s license, phone or utility bills
• passport photographs

As per the bank you are applying at, you may need to notarize or self-attest these documents. Once these documents are verified, your bank will proceed to contact you with the next step.

Step 4: Write a check in your currency or the currency of your resident country

Once your documents are verified, you will need to provide the finance in order to open the NRI account. You can either make the payment in the local currency or in the currency of your residency. You can make it in the form of a check or demand draft.

Step 5 –Deliver it to the bank

Once the required documents are filed, application form is filled and the finance provided, you will need to send these requirements to the bank through a mail. You may need to send it to the PO box or to the Indian address.

What are the features of the NRO account you should be aware of?

When a citizen of India leaves, the country he/she becomes an NRI and thus he/she has to open an NRO account, an NRE account or an FCNR account. They differ in several ways and when making the choice as to which one to open. Given below are some salient features which must be noted for each option:

1. Eligibility

An NRO account can be held by anyone outside India unless they are in Nepal or Bhutan. This restriction is not placed on NRE and FCNR account holders.

2. Joint accounts

A joint account can be held with residents in an NRO account. With an NRE or FCNR account, you cannot hold a joint account with a resident; you can only hold it on a ‘former or survivor basis.

3. Currency in which account is used

An FCNR account is the exception in this case as both NRE and NRO accounts use rupees whereas an FCNR account uses Pound Sterling, US dollars, Japanese Yen, Euros, Canadian Dollars and Australian Dollars.

4. Repatriability

Repatriability is the ability to transfer money from one country to another. The main difference between an NRO account and other accounts is that an NRO account is not repatriable except under certain conditions.

5. Type of account

An FCNR is a term deposit account whereas NRO and NRE accounts are fixed deposits, savings, current as well as recurring account types.

6. Period of fixed deposits

For an FCNR account, fixed deposits have a period in between 1 and 5 years whereas with NRO and NRE accounts, fixed deposit accounts have the same conditions that apply to resident accounts.

7. Rate of interest

The rate of interest on NRE and NRO accounts are much more flexible than with FCNR accounts which have interest rate ceilings and floors.

8. Tax on interest income

It must be noted that the NRO account is the only one which has taxable income.

9. Loan amount

Only with an NRO account are there ceilings or limits on how much you can loan.

These are just some of the characteristics of an NRO account. There are many other salient features which must be noted and these features are crucial in coming to the decision of which type of bank account is best for you as an NRI in your particular situation.

Top mistakes you should avoid as a NRI account holder

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.