What are the tips you need to keep in mind when you want to remit to India?

India is the leading recipients of remittance globally with more than 25 million people of the Indian diaspora sending money to India. The total money remitted to India in the year 2015 was around $68.9 billion contributing to 4% of the gross domestic product (GDP). Remittance to India has grown exponentially since 1991 and is on a constant rise which is expected to grow further more in the next decade.

The regulatory body for remittance in India, FEMA (foreign exchange management Act) of 1999 allows a NRI (non-resident Indian) and PRI (persons of Indian origin) to open and maintain any of the following account:

• Non-resident ordinary rupee account (NRO)

• non-resident external rupee account (NRE)

• foreign currency non-resident bank account (FCNR)
There are a number of ways by which people remit to India. The most commonly used method is the wire transfer offered by almost every bank and some private money transfer agencies. Other ways of remitting money to India are through bank drafts, money orders, ACH transfer, personal cheques and online transfer. No matter which mode you choose to remit to India, listed below are some of the points that you should consider before sending money:

• Never forget to check and compare the exchange rates before sending money. Since the currency value differs, a minor difference in exchange rates can be huge in rupees. So you compare with all the agencies before remitting so that you get the best value for your money and the recipients receive the maximum of what you remit to India.

• You should keep a check on the news and international market trends. If something major is predicted to happen in near future such as demonetization in India or brexit in Uk, it is better to avoid those period and let the dust settle down before you remit to India.

• Selecting the right mode of transfer plays a key role. Different modes have different service charge, cancellation fees, processing fee etc and choosing the right mode of transfer impacts on the total amount to be remitted.

• Timing your remittance is also important. You should always try and remit money  on weekdays (Monday to Friday) as live exchange rates are open so you get plenty of options. Moreover, the international markets are closed on weekends.

• The international money market is ever fluctuating and it is hard to keep a tab on that. So it’s better if you set online alerts for an increase or decrease in exchange rates to give you the best possible outcome.

• Shopping is always a good idea in financial market. Money transfer agencies always come up with something lucrative to attract new customers and shopping gives you a clearer picture of the best rates and deals available.

Why the festive time is the best time to send money to India?

In India, generally, preparations for festivals include house renovation, buying jewellery, buying silver coins, new clothes, electronics, and preparing mouth-watering delicious food items. We Indians celebrate our festivals with an exchange of sweets and good wishes with friends and loved ones. There is joyful celebration with bursting of fireworks everywhere. Well, sending money to India to your family would be the most convenient way to express your love and gratitude in your absence. These funds gives the receiver the flexibility to choose his/her own gift and liberty to spend the way they would wish to.

Probably, the first thing that a person working abroad would do every month is sending money to India to their family. And during festivals they would ensure that they can send money in a hassle-free way and it reaches to their family on time. These special days give an opportunity to do a little more so as to make one’s loved ones feel special. Many of the people living miles away from their family would relate to this responsibility of making money transfer to India to their home.

At times, a person might wait for the best exchange rate and then make money transfer to India. Another factor that can be considered, which many NRIs bear in mind is, the transaction/operational cost associated with a transfer of money to India and the duration within which the money reaches the recipient. But with the advent of new technologies, remitting money back home has become much more convenient and easy. Gone are the days when remittances were sent via traditional channels such as drafts, cheques, then through post offices. Over the past few decades, technological enhancement and globalisation have helped to build a wider range of facilities for making money transfer to India.

During the festive seasons, the banks come forward with lower and much lucrative exchange rates. Hence making money transfer to India during the festive might appear to be pretty much profitable. Whatever be the transferable amount of money to India a pre-planning regarding the time of sending is important. The right timing could make a huge difference in the amount that the recipient account gets in India. For this, tracking of currency exchange rates for a few days or even for weeks is necessary. If a person has time, then he or she should use it to get quotes from different companies and compare who gives them the best buck for their money. Leaving it for the last minute can result in missing out the opportunities of sending money to India at low exchange rates. So, planning ahead helps a lot.

Hence, many people working abroad prefer to send money to India during the festive seasons because the banks and other financial institutions come forward with low and lucrative exchange rates.

How to convert your bank account into an NRO account?

When a Resident Indian becomes an NRI, he needs to convert his resident savings account to NRO account as per the laws pertaining to Indian banking and income tax. The NRO account provides the simplest way to access and operate funds and investments already made in India. The accounts can receive foreign remittances, while having a joint account holder who is a resident India, e.g. the account holder’s parents, and RBI also permits repatriations from NRO account to abroad limited by a maximum annual amount.

In order to convert your current resident saving account to NRO account, you first need to inform the bank about your NRI status. You will need to provide proof that the account holder is now a non-resident of India in accordance to the definition in the Indian tax laws. Once a person becomes an NRI, he cannot continue to hold bank accounts with resident India status.

In order to convert the existing resident bank account into an ordinary non-resident account you need to submit following documents to your bank:

• Identity proof such as passport, driving license, voter id card, or aadhar card

• NRI status proof, e.g. green card or copy of your VISA

• Proof of foreign address, through utility bills, telephone bills or foreign bank statements

• Recent photographs which are not older than 3 months.

The applicant or account holder must provide proof of overseas resident in the approved form. This form includes employment details, student status, dependent visa status, or a copy of the resident permit in the country one is currently living in.
This proof has to be attested by the Indian embassy, notary, or an Indian bank with an overseas branch. Many banks accept self-attested copies of documents. If you need to include your local Indian address, you need to submit another local address proof with attestations.

An NRI can hold three types of bank account namely, NRE, NRO, and FCNR. Out of these three, FCNR, which stands for Foreign Currency Non-Resident, is a foreign currency account which can only be opened as fixed deposit with Indian banks. For daily need, you can either have an NRE saving account or an NRO account. Since you cannot deposit Indian money into NRE account, you must have a NRO account to deposit the income you are receiving in NRO. This income can include rental incomes, dividends received from existing investments such as the Stock Market, in order to receive INR from any friend or family.

The main reasons to open NRO account are as follows:

• To receive any income in Indian rupees e.g. rental income or dividends.

• In order to deposit INR as NRE account can only be funded using foreign currency or remittance.
This is how we can convert a bank account into NRO account.

What can you use your NRI account for?

In banking terminology, the term NRI account refers to funds deposited by a Non-Resident Indian or NRI. The funds are deposited with a financial institution authorised by the Reserve Bank of India to provide such services. A Non-Resident Indian is an Indian citizen who primarily resides outside of India. NRI account lets a person transfer their earnings to India conveniently with complete security. They can repatriate the funds held in the account along with interest earned at any point of time and they don't even have to pay tax on the interest amount. With a host of direct banking channels, which are easily available at one’s fingertips, he/she can stay in complete control of their hard-earned income abroad.

In order to open a NRI account the documents needed are as follows:

• Photocopies of the pages of the passport containing passport details and personal details of the applicant.

• Photocopy of Permanent Account Number (PAN) or Form 60 in absence of PAN.

• Photocopy of valid visa or work permit.

• One passport photograph of the applicant.

• Documents confirming the overseas or Indian address. The given address has to match the address mentioned in the application form.

• An Initial Payment Cheque or Draft from the applicant’s own account equivalent to the amount required to maintain the average monthly balance in the account. (In case of Draft, Demand Draft slip is mandatory).

In case, the applicants cannot come to the bank for opening their account, then all photocopies of the above-mentioned documents need to be attested by either an Indian Embassy or Notary or by a Banker overseas. If the documents are not certified, then all the documents are needed to be self-signed and submitted.

An NRI account can be used by an applicant living abroad for the following purposes:

• For transferring of funds freely between India and abroad whenever required.

• For earning higher interest rates on the account with zero tax payment on the interest earned by the NRI account holder in India.

• For withdrawing cash easily and for shopping worldwide with International Debit Card.

• For appointing a mandate to operate the applicant’s account for him or her.

• For conducting online transactions securely, 24x7, with the net-banking facility.

• For payment of utility bills such as electricity bills, phone bills, mobile phone payments, etc. just by a simple registration.

• Other benefits include getting a personalised chequebook, tax exemptions on interest earned and exemption on wealth tax, free email statement facility, availability of safe deposit lockers at certain branches, facilities of investing in Mutual Funds by linking the NRI account to the investment savings account.

All these benefits provided by the NRI accounts facilitate the Non-Residential Indians to maintain them without much headache and in a secured manner.

Are you aware of the quickremit facility?

Quickremit is an online money transfer service available from many banks. This service offers the best exchange rates in town without compromising on the security and agility of the service. Global correspondent branches of various banks ensure cost efficiency, lower turn-around time and convenience.

The features and benefits of quickremit includes superior exchange rates, direct credit to the  beneficiary's bank account in rupees, direct credit from the beneficiary's account to other banks, doorstep delivery of Rupee Demand Draft at different locations across India, tracking of the transfer status through online trackers and via e-mails, maintenance of address book of all beneficiaries, sending personalised message with the remittances, round-the-clock customer service assistance, make online donations to a host of charitable trusts and organisations.

Registration procedure includes several steps and they are selection of an individual Checking Account or Savings Account with a US bank affiliated to the Automated Clearing House (ACH) network. A person’s social security number, US bank account number, accounts type and bank's 9 digit ABA Routing are required for a one-time registration process. US bank account details are required for verification. This ensures that only the person concerned can use the account and hence avoids any misuse.

The validation and activation processes involve the following steps:-

• A nominal amount in cents is debited and credited to your account the bank.

• Quickremit intimates you by e-mail that the test debit and credit amount has been initiated to your account.

• You have to refer to your bank statement to find out the exact amount that is debited and credited.

• Your Quickremit transaction status shows "Click to Verify" on the computer screen.

• Enter the exact amount in the space provided.

• If the details match the actual transactions carried out by the bank then your account will get activated and you will get an email notification on account activation.

• Check the verification status by logging in to Quickremit and then you can start remitting after successful verification of your account.

Funds are transferred from your bank account via Automated Clearing House mechanism. ACH network is a reliable and efficient nationwide electronic funds transfer system governed by the National Automated Clearing House Association's operating rules that authorise inter-bank clearing of electronic payments. One week count starts from the day the money from the previous remittance reaches the beneficiary account in India. Quickremit offers you the simplest way to make online donations to a host of charitable trusts and organisations in India that are empanelled with various banks.

Here is how to manage your bank accounts when you return home

The evolving global development has seen many Indians returning to the country. This amounts to the change of their status from a Non-Resident Indian to an Indian Resident as far as money matters are concerned. One must inform their banks about changes in their residential status. The necessary paperwork is required to be followed to give effect to this change of status.

Here are few types of bank accounts that may in such cases. They are as follows:-

• NRE / NRO account- The first step to be taken when an NRI returns back home, is to
inform the bank about the change of status. The NRO and NRE account that he holds will have to be re-designated to resident savings account. NRO account or deposit must be then re-designated into a resident rupee account. FCNR and NRE account can be closed immediately or can be allowed to run up to maturity. And if anyone continues till maturity, he/she will be credited with extra interests. Pre-withdrawal will attract penalties.

• RFC account- An NRI  also has the option to convert the existing NRE account to a Resident Foreign Currency (RFC) Account. In this account, you can maintain funds in foreign currency with the funds being fully reportable. This account can be held in the form of savings, current or even in term deposits accounts. This account allows funds from abroad to be deposited in this account. The funds can include foreign currency from sale of assets outside India or income that is received outside India such as income from employment, assets, investments. You can also transfer the balance to the RFC account. You should be aware that no penalty is payable for premature withdrawal of FCNR/NRE accounts in such cases. Funds in this RFC account can be freely remitted abroad or credited to fresh FCNR/NRE account if you regain non-resident status.

• Form for re-designation of account- A declaration for re-designation of NRO or NRE account to Resident or the RFC account will be required to be filled up by the returning NRI. You would be required to provide details such as account number, joint holder details (if any), and customer identity proof which need to be filled up and signed by all account holders. This form must also be submitted at the local branch of the bank. The Process involves re-designation to Resident Rupee Savings account or to Resident Foreign Currency account once the bank receives the declaration. Once the given NRE account is converted to Resident Savings account, interest earned thereon becomes taxable.

One is advised to consult a tax advisor before making any decisions regarding such matters. These are the things one can do for managing their bank accounts when they return to India.

Must know rules for NRI’s investing in Home Loans

More and more NRIs want to buy property in this country as RBI has simplified the rules relating to their purchase. The Foreign Exchange Management Act (FEMA) defines an NRI as someone who stays outside India for ‘employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period’. Real estate transactions and, by extension, NRI home loans are governed by the rules under FEMA. India’s economy has strengthened over the last decade or so and this has provided a favourable environment for NRIs to invest in real estate here. But there are certain rules and regulations that govern the entire process of NRIs buying property with home loans in India.

The rules for NRIs investing in home loans are:

• An NRI cannot purchase more than two residential properties in India. This is irrespective of the fact whether he or she has a property in the country of his or her residence. Most importantly, NRIs are not allowed to buy agricultural properties in this country. There are no such restrictions on commercial property though. NRI home loans can also be availed to purchase, renovate or construct a new or existing house.

• How much home loan you an NRI get from a bank depends on his income an educational qualification. Banks generally expect the borrower to have a graduate degree.

• Various documents like passport, visa, work permits, salary proof and statement of non-resident external (NRE) or non-resident ordinary (NRO) accounts are required.  You can even submit these documents online instead of coming all the way back to India.

• Different banks provide different amounts of loan. However, the tenor for NRI home loans is generally lesser when compared to normal home loans. This is because repayment capacity of NRIs is considered to be better than resident Indians.

• NRIs have the option of paying back the home loans through EMIs. However the repayment can be done only through NRE and NRO accounts with remittance from abroad. The down payment should be done though normal banking channels or NRE or NRO account in India.

Other rules include that if an NRI is buying an under-construction property, he or she has to give the power of attorney to your builder or trusted associate. The guidelines issued by RBI indicate that nri home loans shall be given based on the same criteria as those applicable in case of residential Indians. NRI home loans are secured by equitable mortgage of the property that the NRI wishes to purchase. It is, however, to be kept in mind that there are no limits or restrictions on the number of properties an NRI can purchase or retain in India. But he is allowed to remit sale proceeds of only two properties out of India as per existing guidelines. The only portion of sales proceeds that which was paid using the foreign currency can only be repatriated.