NRI's CORNER
F.E.M.A.
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 :
 
1. 
1.
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 :
 
 
i)
convert the FCNR(B) deposit to Resident Foreign Currency Account (RFC), or  
 
 
ii)
convert the FCNR(B) deposit as Resident account.
   
2.
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;
 
 
i)
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. 
 
alttag