A person who has left India and is now residing outside of India for employment, business, or any other reason is known as NRI or non-resident Indian. There are elaborate definitions put forward by banks for an NRI. According to HDFC Bank, “An NRI is that individual who has gone out of India or who intends to stay outside India for any other purpose signifying his intent to stay outside India for an indefinite period.”
In this article, we will expand on the must-know facts regarding opening a bank account by an NRI according to the Union Bank of India’s website.
The different types of accounts an NRI can open
NRI can open the following accounts in rupees:- NRE & NRO in FC (FCNR)
A fixed deposit is considered the safest form of investment option in India. However, the fixed deposit is not limited to residents of India only. NRIs or the Non-Resident Indians also have this option in the form of NRI fixed deposit (FD) accounts.
These accounts are of four different types, viz. NRE (Non-Resident External), NRO (Non-Resident Ordinary), and FCNR (Foreign Currency Non-Resident) including RFC (Resident Foreign Currency) accounts.
Opening multiple accounts
NRI’s can open multiple accounts in India. An NRI can also open accounts from abroad. An NRI Can also open accounts from abroad by sending duly filled and signed AOF duly attested by the Indian Consulate along with attested copies of passport and Visa, etc.
Accounts with zero balance
There are certain criteria when it comes to opening an account with zero balance. An individual taking up employment, business, vocation etc. can complete the account opening formalities prior to going abroad with zero balance. Subsequently, he/she must remit funds to make the account operative within a reasonable time, whereafter only a cheque book will be issued.
Power of attorney, Nomination
An NRI can appoint a Power of Attorney holder to make local payment from his NRE / NRO a/cs. and also investments on his / her behalf. For the NRI accounts, they can nominate either a resident or a non-resident as nominees. However, only one nominee is permitted per account. The nominee can also be a minor in which case, a guardian has to be appointed to receive payment on the minor’s behalf.
However, there is some restriction on people holding the power of attorney. The Power of Attorney holder cannot open and close NRI a/cs. in the name of NRIRepatriate funds from a/c. in the form of DD/TT etc.., unless specified in P.A.They can’t Give gifts or transfer funds to NRE accounts other than that of Principal? He /she cannot raise loans/execute documents on behalf of NRI and cannot tender FC/FCTC.
Investment in immovable properties
When it comes to NRIs investing in immovable properties on a repatriation basis, the benefit is available for 2 residential houses. The purchase should be out of funds remitted from aboard or out of NRE/FCNR a/cs, in accordance with the provisions of FERA/FEMA.
NRI deposits can also be prematurely extended for interest benefits. The deposit will earn interest without penalty for the period it has run, provided it has run for the minimum maturity period and thereafter at the higher interest