NRIs HOLDING DEMONETISED Rs. 500/- & Rs. 1000/- CURRENCY
Plea for SBNs held by PIOs & NRIs.

Shri Urjit Patel
Governor
Reserve Bank of India
Central Office Building,
18th Floor, Shahid Bhagat Singh Road,
Mumbai-400 001.

Dear Shri Patel ,

Good wishes.

I Rajesh H Dhruva am a Chartered Accountant advising Overseas Indians in matters related to Foreign Exchange Management Act, 1999 (FEMA) , Indian and International Tax for more than 26 years and am also Chief Executive of femaonline.com.

The Press Release and Notification RBI/2016-17/205 dated 31st December 2016 of Reserve Bank of India extends Facility for Indian Citizens who were abroad for Exchange of  Specified Bank Notes (SBNs). I am prompted to draw you attention to certain important miss outs which have created serious hardship for Non Resident Indians who are foreign citizens of Indian origin as mentioned herein :

I.    RULES :

1.  The Press Release as also Notification No. RBI/2016-17/205 DCM (Plg) No.2170 /10.27.00/2016-17 grants facility to exchange SBNs during grace period to INDIAN CITIZENS only .

2.    Indian Citizens are further divided as :
.01  RESIDENT INDIANS who were abroad from 9th November to 30th December and
.02  NON RESIDENT INDIANs (NRIs) who were not in India from 9th November to 30th December.
.03  Whereas Resident Indians are not having any restrictions about the amount of deposits , NRIs are restricted to tender a maximum of Rs. 25,000/- subject to production of Indian Customs certificate of import of SBNs..

II.    ANOMALIES :

1.    Foreign Citizen of Indian Origin i.e. Person of Indian Origin (PIOs) who are also NRIs are not granted the facility and are eliminated in total.

2.  The term NRI as also definition of NRIs (vide Foreign Exchange Management (Deposit) Regulations 2000 vide Schedule 1 clearly regarded Indian citizens as also Foreign citizens of Indian origin as Non Resident Indians..
.02 Even the F
oreign Exchange Management (Deposit) Regulations 2016, Notification No. FEMA 5(R)/2016-RB dated 1st April 2016 in Schedule 1 specifically permit Foreign Citizen of Indian Origin to maintain Non Resident External (NRE) accounts at par with NRIs who are Indian citizens.

3.   Foreign Citizens of Indian Origin are also allowed to maintain Non Resident Ordinary (NRO) account as per details of Schedule 3 of Master Direction on Deposits and Accounts.

4.    There are large number of NRIs who have adopted Foreign Citizenship and the entire class of these Foreign citizen NRIs are excluded from this facility which is restricted only to NRIs who are Indian Citizens.

5.    FOR SURE this seems to be a drafting error and not the intention of Reserve Bank of India nor the Government of India.

6.    Moreover whereas Resident Individuals are granted facility to deposit any amount of SBNs, NRIs are restricted to deposit maximum amount of Rs. 25,000/-.

7.    This restriction seems to be based on the assumption of SBNs being carried out of India and brought back in India as a condition is also laid down about certificate of Customs Authorities for import and subsequent deposit of SBNs up to Rs. 25,000/- as FEMA Regulations permit an individual to carry a maximum of Rs. 25,000/- only out of India.

8.   This provision has totally missed NRIs having SBNs at Home in India or in Lockers in India which would have been left in India being legitimate balances out of Bank withdrawals from NRO / NRE accounts.

9.   I may also draw Your kind attention to the fact that till 31st December 2016 Foreign Citizens of Indian Origin could deposit legitimate balances of SBNs in their NRO account at par with Indian Citizen NRIs.
.02  And there were no limits of Rs. 25,000/- as the Reserve Bank of India recognized the fact of NRIs having legitimate unspent balances of SBNs in India.

10.    In contrast, now, only Indian Citizens are allowed to deposit SBNs up to Rs. 25,000/- being imported into India thereby NRIs who were Foreign Citizen of Indian Origin are denied the benefit of depositing their legitimate balances of their SBNs imported into India and
.02    NRIs who are Foreign Citizens as also Indian Citizens are both denied facilities of depositing SBNs which were retained in India but could not be deposited before 31st December only on account of such NRIs not being in India and also relying on Reserve Bank of India's earlier Notification allowing deposit of legitimate balances of SBNs after 31st December 2016 upto to 31st March 2017.

III.  REMEDIAL SUGGESTIONS :

1.    No doubt by virtue of A.P. (DIR Series) Circular No. 24 of 3rd January 2017 extension has been granted to Foreign Citizens to exchange SBNs up to Rs. 5,000/- per week upto 31st January 2017  which will squarely include Foreign Citizens of Indian Origin but as that would not allow import of SBNs by Foreign Citizen NRIs , Reserve Bank of India should allow up to 30th June 2017 :

.01  Recognise Foreign Citiznens of Indain Origin NRIs at par with Indian Citizen NRIs  as regards deposit of SBNs up to 30th June 2017.
.02  Allow Foreign Citizens of Indian Origin to import SBNs up to Rs. 25,000/- in India for depositing into their NRO account and
.03  Also allow deposit of all the legitimate balances of SBNs retained in India by Indian Citizens as also Foreign Citizens of Indian Origin.

2.  R
eserve Bank of India should also accept deposits of SBNs by NRIs as also other permissible individuals at all Offices of Reserve Bank of India.

I am sure my submissions will find your consideration and favour.

Thanking you in anticipation.

Sincerely ,

RAJESH H DHRUVA
Chief Executive

femaonline.com
Tel. No. : 0091 281 245 3367 (four lines) / 245 9613
Cell : 0091 98240 49944
email  
rajesh@femaonline.com ; keynote@nribanks.com

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29th November 2016

Dear Friends ,

Good wishes.

1.   On the 8th November 2016 Government of India demonetised high value currency notes of Rs. 500/- and Rs. 1000/- with an intention of curbing the menace of fake currency which were used for antinational and illegal activities by terrorists and anti national elements and also to curb hoarding of black money. This demonetization of  Indian currency notes called specified cash currency have serious repercussions not only for Indians residing  in India but a pinch is also felt by Indians residing abroad .

2.    It is quite normal for NRIs to leave India with a few 1,000/- and 500/- unspent Indian Rupee specified currency notes after a tiring shopping fiesta or as a small change left in the pockets or purses.

3.    But in a few cases NRIs do have specified  cash currency of Rs. 500/- and Rs. 1000/- being withdrawn from Banks for celebration, marriages, etc. and not being deposited in Bank for want of time or so. 

4.    Now these specified  cash currency of Rs. 500/- and Rs. 1000/- should not cause a great worry as the Indian Government and Reserve Bank of India (RBI) have addressed such issues allowing NRIs to freely deposit any amount of legitimate  Rs. 500/- and Rs. 1,000/- specified currency notes in their Non Resident Ordinary (NRO) account.

5.    Although the Government has not defined legitimate balance the same will include balances of or out of :
.01  Currency notes withdrawn from Bank account during visits to India.
.02  Currency notes withdrawn by Power of Attorney Holder to meet domestic expenses and disbursements.
.03  Gifts received during visit to India from close relatives e.g. Diwali Gifts to children by Uncles and Aunts.
.04  Currency notes received from sale of miscellaneous assets such as second hand furniture , fixtures , motor car , etc.
.05  Currency notes received on sale of foreign currency to Bank or Authorized Money Changer etc.

6.   No doubt Reserve Bank of India has clarified that NRIs can deposit currency notes in NRO accounts and the Finance Ministry has also clarified that cash currency deposit to the extent of Rs. 250,000/- by Housewives and others will not be reported to Tax Authorities.
.02 However this should not be taken casually and even for deposit of amount below Rs. 250,000/- supporting evidences for withdrawal will be appropriate.
 
7.    If one does not have such evidence Bank may be requested for certificate of withdrawal .
.02  The withdrawal will be reflected in the Bank passbook or statements.

8.   Ideally NRI himself should visit India and deposit the cash currency in his NRO account.
.02  However, if he does not have the convenience to travel he can authorize any person to deposit such currency in his NRO account.

9.    The Authority Letter in original should ideally be notarized or should be signed in presence of Overseas Banker who should affix bank seal .

10.  If the specified cash currency is in India then NRI's problem can be solved by visiting India or Authorizing an Indian Resident.     
.02  However if the specified cash currency is abroad bringing the same into India can create dicey issues.
.03  The Law of Foreign Exchange Management Act, 1999 (FEMA) and Customs provide for carrying of Indian currency outside India up to Rs. 25,000/- only by an NRI or Resident of India.
.04  Therefore traveling by an NRI himself for depositing an amount of Rs. 25,000/-  or less will be a costly affair and may not cover the cost of travel which  will be more than such balance.
.05  On the other hand presently there are no specific provisions for import of currency into India by an Authorized Person i.e. a person other than NRI. 

11.  Having specified cash currency abroad is going to be a challenge for quite few NRIs which needs to be addressed and the Government of India should allow an Authorized Representative to travel with an NRI's specified cash currency for depositing into NRO account.

12.  Reserve Bank of India has clarified that in case one cannot deposit the currency before 31st December 2016 will be given an opportunity to deposit and exchange the same at Reserve Bank of India's Offices up till such time as notified by Reserve Bank of India.

13.  Copy of proforma Authority Letter is posted herein for convenience and
.02  RBI's FAQs can be read at : 

https://www.rbi.org.in/Scripts/FAQView.aspx?Id=122

Hope the contents are found useful and if there are any queries please write whereupon we will be happy to address the same to the best of our ability.

with regards ,
sincerely ,

RAJESH H DHRUVA
Chief Executive
femaonline.com
Tel. No. : 0091 281 245 3367 (four lines) / 245 9613
Cell : 0091 98240 49944
email
rajesh@femaonline.com; keynote@nribanks.com  

 

AUTHORITY LETTER

I the undersigned (NAME IN FULL) a Non Resident Indian of Indian Origin holding (………………COUNTRY) Passport No. ………………………………( PASSPORT NUMBER ) residing outside India and having address at ………………………………(OVERSEAS ADDRESS IN FULL) &  Permanent Account Number (PAN) Card Number ………………………………….(PAN CARD NO.)                        hereby authorize Mr. / Mrs………………………….( NAME IN FULL OF AUTHORIZED PERSON) having address at ………………………… (ADDRESS IN FULL) and having PAN Card / Driving Licence / Passport Number …………………………( INSERT NUMBER OF THE PAN , DL or PASSPORT AS CASE MAY BE)   to deposit Indian specified cash currency of Rs. 500/- and Rs. 1,000/-  owned and held by me which has been demonetized on the 8th November 2016.

I understand that vide Frequently Asked Questions (FAQs) Q. no. 19, 20 and 21 of Reserve Bank of India dated 25th November 2016 , in case of NRIs authorized person can deposit legal specified Indian currency notes in my NRO account and being outside India I am eligible to authorize such person in India.

Specified cash currency notes are to be deposited in my NRO account number (PLEASE MENTION NUMBER) held with (NAME OF THE BANK) at (BRANCH DETAILS ).

I affirm and confirm that Indian specified cash currency deposited by authorized person is legally owned by me and comprises of ……………..(NUMBER) notes of Rs. 500/- and ……………..(NUMBER) notes of Rs. 1,000/-.

 

Date :                                                                                                                                                                                                            _____________

Place                                                                                                                                                                                   (NAME IN FULL)

  

 
FAQs on Withdrawal of Legal Tender Character of the existing Bank Notes in the denominations of ₹ 500/- and ₹ 1000/-
 .........................

19. I am right now not in India, what should I do?

If you have Specified banknotes in India, you may authorise in writing enabling another person in India to deposit the notes into your bank account. The person so authorised has to come to the bank branch with the Specified banknotes, the authority letter given by you and a valid identity proof (Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff)

20. I am an NRI and hold NRO account, can the exchange value be deposited in my account?

 

Yes, you can deposit the Specified banknotes to your NRO account.

 

21. I am a foreign tourist, I have these notes. What should I do?

You can purchase foreign exchange equivalent to ₹ 5000 using these Specified Bank Notes at airport exchange counters, provided you present proof of purchasing the Specified Bank Notes. Foreign citizens will be permitted to exchange foreign currency up to ₹ 5000 per week. Necessary entry to this effect will be made in their passports.

.............................

https://www.rbi.org.in/Scripts/FAQView.aspx?Id=119



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