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BANK ACCOUNT IN INDIA

RETURNING NRIs CORNER - BANK ACCOUNTS IN INDIA

Non Resident Indian can open and operate rupee as also foreign currency bank accounts in India on repatriation or non repatriation basis. FCNR account can be maintained as deposit only for a period of 12 months to 36 months whereas NRE (Rupee) account can be opened as current, savings and deposit account for a period of 12 months to 36 months. Both these accounts are fully repatriable and exempt from tax in India.

NRIs can reap the benefits of tax free repatriable interest earnings from their deposits with banks in India. Funds can be deposited in FCNR(B) account in - US$; GBP; EURO; JY or as NRE (Rupee) deposits on repatriation basis and in NRO account on non repatriation basis. NRNR and NRSR - both rupee deposits have been discontinued since 01/04/2002.

Non Resident Indians returning to India for taking up employment / permanent settlement are required to make such declaration to the bank and to redesignate their Non Resident accounts as Resident accounts or convert the same to RFC account The Rules vary for various accounts are as under :

Foreign Currency Non Resident (B) - [FCNR-(B)]

An NRI upon his return to India for settlement, i.e. taking up employment, carrying on business or profession or any purpose indicating intention to stay in India for uncertain period holding an FCNR(B) account

.01

can continue such deposit uptill maturity;

at contracted rate of interest & other terms if he so decides.

.02

Upon maturity, returning NRI is required to :

convert the FCNR(B) deposit to Resident Foreign Currency Account (RFC), or

ii)

convert the FCNR(B) deposit as Resident account.

Definitions :

01.

"FCNR(B) Account" means a Foreign Currency Non-resident (Bank) account referred to in clause (ii) of sub-regulation (1) of Regulation 5

02.

" Non Resident Indian ” for the said chapter means a person of Indian origin being an Indian citizen or a foreign citizen who is residing outside India.

03.

"Overseas Corporate Body " means a Company, Partnership Firm, Society etc. wherein 60 % or more ownership lies with NRIs or a Trust wherein 60 % or more financial interest is irrevocably held by NRIs.

04.

"Person of Indian Origin" means an Indian citizen or a foreign citizen who;

at any time held an Indian Passport, or

ii)

himself or his parents or grand parents were citizens of India, or

iii)

is a spouse of an Indian citizen, or

iv)

is a spouse of person referred to in (i) or (ii) above.

FEATURES OF FCNR(B)

1.	ELIGIBILITY	An NRI individual only can be a returnee NRI, and as such can continue such account uptil maturity.
2.	CURRENCY	US Dollars, Pound Sterling, Japanese Yen and Euro
3.	PERIOD	12 Months to 36 Months.
4.	REPATRIABILITY	Principal and Interest ,upon maturity may be transferred to Resident Foreign Currency a/c. or to a resident a/c.
5.	INTEREST	Compounded Half yearly.
6.	TYPE Of ACCOUNTS	Fixed Deposits.
7.	LOANS	Available to account holder as well as third party resident in India. LOANS IN INDIA-to ACCOUNT HOLDER : For business investment in shares & securities, purchase of house property for own residential purpose and any other personal purpose. LOANS IN INDIA-to 3RD PARTY : For personal or business purpose.
8.	TRANSFERS -UPON RETURN TO INDIA FOR PERMANENT SETTLEMENT	Maintained as FCNR(B) [ until maturity] and thereafter transferable to : - Residential Foreign Currency ( RFC) Account or - to be designated as Resident Rupee Account.
9.	ATTORNEY	An Attorney may operate the account, but can not open RFC / Resident account .
10.	NOMINATION	Permissible.
11.	PREMATURE WITHDRAWAL	Permissible: - However for period of less than 12 Months - No Interest payable, above 12 Months - Subject to Penalty - As per Bank Rules.
12.	TAXABILITY	.01	Interest exempt from Income Tax, uptil maturity.
		.02	Balance not subject to Wealth Tax.
		.03	No Gift Tax provisions in India..
13.	PERMITTED CREDITS		Not Applicable , as maintaining the Deposit only till maturity is permissible.
14.	PERMITTED DEBITS	a)	Local disbursements .
		b)	Maintained as FCNR(B) [ until maturity] and thereafter transferable to : - Residential Foreign Currency ( RFC) Account or - to be designated as Resident Rupee Account.