Q.1 In case NRIs intend to open the account from abroad, can be documents/forms be got signed in the presence of officials of correspondent bank or Indian Embassy/High Commission?

A. As far as possible, the forms/documents should be got signed by account holder in the presence of authorized official of correspondent. Such Signatures should be attested by the above said official under seal. If this arrangement is not possible, signatures can be done by account holder in the presence of Embassy/High Commission/Consulate official. A confirmation to this effect should be sought through Registered letter by authorized dealers.

Q.2 In case of nomination facility for local deposits, Reserve Bank of Indian has advised the banks that account holder should come personally and sign in the presence of bank official for nomination/variation/cancellation in nomination form and execution of indemnities. Is it Compulsory?

A. Authorized dealers should obtain the signatures of all account holders as far as possible in the presence of their bank officials. If not possible, they may get signatures of accounts holders in the presence of authorized officials of their correspondents and same were verified by the authorized officials whose signatures are with authorized dealer in India.

Q.3 Whether funds from FCNR (B) account are transferable to NRNR or RFC account of the same account holder and no penalty shall be levied on such premature withdrawal. Funds are not transferable to NRNR account.

Q.4 A Non-resident Indian intends to invest funds from NRE account in Certificate of Deposit being issued by commercial banks and also in commercial papers issued by Indian companies. He inquires whether maturity proceeds of certificate of Deposit and commercial paper are creditable in SB-NRE account or not?

A. Principal amount and interest without RBI permission on Certificate of Deposit and commercial paper are not re-printable, so the proceeds can not be credited in SB-NRE account. However, these precedes can be credited in SB-NRO account. Though Exchange Control Manual does not mention about acceptance of deposit non-repatriable investments but banks have been advised separately to accept deposits under "Certificate of Deposit" scheme on non-repatriation basis.

Q.5 Whether foreign nationals of non-Indian origin residing abroad can open NRO accounts?

A. Earlier foreign nationals were permitted to open NRO account provided the account had been funded through remittance from abroad in an approved manner and funds were to be used for local payments only and no repatriation of balance was permissible. But in latest Exchange Control Manual, foreign national spouse of NRI can open NRO account jointly with his/her wife/husband.

Q.6 When a foreign national of non-Indian origin residing in Indian goes abroad for a period more than six months, should authorized dealer convert resident rupee account to NRO account?

A. Resident rupee account should be converted into an Ordinary Non-Resident Rupee (NRO) account as soon as the account holder ceases to be resident in India.

Q.7 Whether husbands of married daughters of NRIs to persons of Non-Indian parentage, residing are eligible for opening accounts?

A. Yes Husbands of married daughters are covered under the definition of persons of Indian origin but they can open their accounts jointly with their spouses.

Q.8 Shri Anil Kumar Goyal, a Government Official Posted on deputation to UNICEF in New York. His mother residing with him doing neither any job nor any business there. Can she open her SB-NRE account.

A. Yes, dependents of NRI residing abroad other than Nepal and Bhutan are eligible to open account as per RBI guidelines however dependents of NRI residing in Nepal but remitting funds in freely convertible currency are also eligible.

Q.9 Rehana wife of Karim who was born in Lucknow in 1941 and later on became citizen of New Zealand. She want to open her SB-NRE account during her business tour to India. Whether branch can open her individual NRE account.

A. Before opening the account of wife Karim, bank branch shall ensure that she is eligible under the category of persons of Indian origin i.e. she and her husband never became national of Pakistan or Bangladesh. If she does not fall under the above-said category and is from Indian parentage, the bank branch may open the account, otherwise she may be advised to obtain permission from Reserve Bank of India.

Q.10 A lady got an international scholarship to go to England for higher studies. She was also allowed to take her husband to look after her only son during the studies period. Her husband intends to open SB-NRE account. Should the branch allow him to open the account?

A. Branch shall not open his NRE account because his wife is not eligible to the status of Non-Resident Indian National being a student. So, her husband also does not enjoy the status non-resident Indian National.

Q.11 A cricket player joined a county cricket club in England and also represent Indian cricket team. Can he open his NRO/NRE account with authorized dealer in India.

A. The non resident status of cricket player is doubtful. He can request Reserve Bank of India for allotment of non-resident status but he shall have to forego the benefits available to resident Indian and have to observe debit/credit restrictions applicable on NRI accounts after attaining non-resident status.

Q.12 A foreign citizen of England is manager in on of the FERA company in India since 1985. He had been deputed by the company to set up a paper mill in Malaysia under his supervision for a period of one year. His family did not accompany him due to certain reasons. He was also permitted to visit India for a week after every months. He requested his local banker to open his NRE account with foreign currency which he brought from Malaysia. Can the bank open his NRE account?

A. If foreign citizen is a person of Indian origin he can open NRE account. But if the foreign citizen is of non Indian origin then, he can not open NRE account. However his existing accounts shall also be converted into NRO accounts from the day he leaves the country for deputation by all banks and post offices.

Q.13 An official of S.R. & Co. P. Ltd. Deputed for four months to market their products in the European countries. Is he eligible to open NRE account?

A. Officials of private limited company deputed/posted outside India so not fall under the category of non resident Indian nationals. So, such officials are not eligible to open their accounts under any of the deposit schemes for NRIs.

Q.14 A Doctor joined a private hospital in USA to study and conduct research. Later on, he also slated to render consultancy to meet out his expenses and wants to remit surplus funds in India. He requested to open his NRE account. Can the authorized dealer accede to his request?

A. If the heart surgeon has gone abroad on student visa, he is not eligible to open NRE account. If he has gone as consultant to USA other than student visa, he enjoys status of NRI and he can open his account under any of the deposit scheme for NRIs.

Q.15. A biotechnologist engaged in research at his own agriculture farm in India. He also visit European countries generally for 3 to 4 months to extend consultancy there. He wants to open an accounts where he can retain the foreign exchange with an authorized dealer in India.

A. The biotechnological does not enjoy the status of non resident Indian national as he does temporarily out of India so he cannot open his account under any deposit scheme for NRIs. However he can open his account under the scheme "Exchange Earner Foreign Currency" account under which he can utilize 25% of funds remitted to India, for the specified purpose under the scheme otherwise, he shall have to obtain permission from RBI to open his RFC account.

Q.16. A trust promoted in New York, America by non resident Indians and they had contributed donations to the extent of 65%. Is this trust eligible to open NRO/NRE account with authorized dealer in India.

A. Contributions of donations is not the criteria of eligibility to open the account of Overseas Trust. The criteria of eligibility to open the account of Overseas Trust. The criteria is beneficial interest directly or indirectly (not as nominees) of non resident Indians which never falls below 60% in the trust. If this criteria is fulfilled, the trust is eligible to open NRO/NRE account, otherwise the trust is ineligible.

Q.17. An expert house of Mumbai opened its branch at New York. One of the Director of Company (export house) frequently visits New York and stays there more than 182 days in a year. Is this falls under the category of NRIs and eligible to open the NRE/NRO account?

A. As per foreign Exchange Regulation Act 1973, period of stay outside India during a year does not make a person eligible for non resident status but the purposes for which the person has gone outside India or for uncertain period, is important to determine non resident status of a person. If the director has settled there, he is eligible to open NRE/NRO account.

Q. 18. While opening accounts of Non resident Indians, nothing in written about introduction to be obtained in Exchange Control Manual. Is introduction not compulsory and can banker get protection under negotiable Instrument act?

A. Proper Introduction in the account is not required under FERA, Banks get protection under Negotiable Instrument Act for collecting a crossed cheques for its customer for consideration, good faith and without negligence. Proper introduction helps bank to prevent frauds and identify the person in case of need. So, bank should obtain proper introduction to prevent frauds and to get protection under Negotiable Instrument Act. While collecting cheques drawn on local banks.

Q. 19. As the interest payable on balance held in NRO account has been made repatriable from Oct. 1 1994, can the authorized dealer credit such interest to the NRE/FCNR (B) of the account holder after obtaining permission from Reserved Bank of India.

A. No, however, interest payable after Oct. 11 1994 can be credited to NRE/FCNR (B) of the account holder after obtaining permission from Reserve Bank of India.

Q. 20. What is the procedure of payment of interest for the overdue period of interest for the overdue holder after obtaining held in RFC scheme?

A. Bank were not paying interest on overdue deposits in absence of guidelines from RBI. Canara Bank had forbaded to pay overdue interest of RFC deposit vide circular NOID/30/92. In Jan 97, RBI has clarified that banks can pay overdue interest as per their banks policy.

Q.21. A person of India origin who is national of Afghanistan evidenced from his passport is having NRO account. He requested the authorized dealer to issue a pay order of Rs. 12.00 lacs in favour of a resident person from whom he has purchased a house in Delhi, should he branch accept his request by debiting his NRO account?

A. Authorised dealer should not issue pay order and advise to account holder that he is not allowed to purchase immovable property in India. The account holder should be advised to obtain permission from Reserve Bank of India to purchase the house in India on FORM IPI-1.

Q. 22. As all the countries have come under the External Group Category, can the bank open NRE (convertible) FNCR (B) account, if funds sent are in permitted currencies by NRIs from country of erstwhile bi-lateral Group?

A. Yes, RBI permits specifically opening of NRE (covertible) FCNR (B) account of a person residing in erstwhile Bilateral Group of countries, if such accounts are opened with freely convertible currency remitted through normal banking channel.

Q. 23. Whether Nepalese/Bhutanese settled in a country of External Group can open NRE/FCNR (B) account?

A. Nepalese/Bhutanese of non resident origin are neither covered under non resident India Nationals nor persons of Indian origins, so they are not eligible to open the account.

Q. 24. Whether Nepalese/Bhutanese settled in a country of Bi-lateral group can open NRE-non convertible account?

A.Nepalese/Bhutanese of non resident origin are neither covered under non resident Indian Nationals nor persons of Indian origins, so they are not eligible to open the account.

Q.25 Can authorized dealer open NRE convertible and non-convertible accounts of the same person residing in erstwhile Bi-lateral group of countries if he has remitted funds in convertible and non-convertible currencies respectively?

A.RBI has permitted to open non-convertible NRE account of any person settled in erstwhile. Bilateral group of countries but authorized dealers are also permitted to open separate convertible NRE accounts of the same person provided such account is opened with freely convertible currency.

Q.26. An Indian Resident maintaining a saving bank account in the branch for the last 3 years. He requests the branch manager to open SB-NRE account in the name of his son Ramesh Kumar residing in England and submits account opening from duly introduced by himself alongwith photograph signed across on the account opening form by Sh. Ramesh Kumar. Can the branch open SB-NRE account on Ramesh Kumar with a refund order issued by an Indian company permitted by Reserve Bank of India to accept subscription under repatriable scheme of "Investments in Priority Industries under 100% scheme"?

A.Branch may open SB-NRE account after ensuring that Ramesh Kumar really comes under the category of Non Resident Indian and resides outside India ; and should obtain a photocopy of the Passport duly attested by Notary Public or Indian High Commission. The branch should open the account with remittance received from abroad other than Nepal and Bhutan or by debit to FCNR/NRE- account of the account holder maintained with another authorized dealer and a certificate to this effect must be obtained from the authorized dealer. However NRE account can be opened with refund order proceeds but, bank branch should obtain a certificate from investee company’s banker indicating the original subscription was received by way of remittance from abroad or by debit to the applicant’s NRE/FCNR/FCNR(B) account.

Q. 27 A bank branch has opened a SB-NRE account of a person. The account holder executed a power of Attorney in favour of his friend who is Chartered Accountant in India. The account holder usually remitted funds from abroad. The power of attorney came to the branch and tendered currency notes 2000 US$ for deposit in the account. Can the branch accept this deposit in the account or not?

A. The branch should not accept the currency notes of US dollars tendered by the power of attorney holder for credit into the account of non-resident Indian as it violates section 8 (1) of FERA. It clearly stated in this section that "Except with the previous general or special permission of RBI, no person other than that an authorized dealer shall in India and no person resident in India other than authorized dealer shall outside India, purchase or otherwise acquire India, purchase or otherwise transfer or land to or exchange with any person being an authorized dealer, any foreign exchange : provided that nothing in this sub-section shall apply to any purchase or sale of foreign currency effected in India between any person and a money change." In this case, there is neither any previous general permission under exchange Control regulations to the resident person to acquire foreign currency from Reserve Bank of India.

Q.28. A bank branch has issued a fixed deposit receipt under NRE scheme on 30.6.95 in favour of a non-resident Indian for Rs. 10000/- for a period of one year. The account holder requested the branch on 30.7.96 to renew the fixed deposit receipt from 30.6.96 and pay interest @ 12% p.a. The interest rates on 30.6.96 and 30.7.96 were 12% and 11% respectively. Should the branch accede to the request of the account holder?

A.As per RBI guidelines, the depositor is allowed to get renewed matured deposit from the date of maturity to the date when he seeks renewal provided the overdue period (bother days inclusive) does not exceed 14 days. The interest rates payable on deposit receipts so renewed will be either the rates of interest prevailing on the date of maturity or the date when he seeks renewal whichever is lower. In this case, the deposit receipt @ 11% p.a. from 30.6.96 as the lower rates is 11%.

Q.29. A NRI having NRE-cumulative deposit receipt of Rs. 5.00 lac intends to raise a loan of Rs. 2.00 lacs against the abovesaid deposit receipt during his visit to India. He requested the branch to credit loan among proceeds to his saving bank NRE account so that he may utilize the funds as and when required. Should the branch accede to the request of the account holder?

A.No. authorized dealer should advise that funds either can be place in the NRO account of the non-resident India shall be disbursed in the Indian Currency. However, the branch can make premature payment of cumulative deposit receipt and may credit the proceeds in SB-NRE account otherwise loan amount will also become repatriable if loan is repaid from NRO account.

Q.30. Whether funds received under FIRPS arrangement can be credited to FCNR (B) and FCNR (B) and NRNR account?

A.Funds received under FIRPS arrangement can be credited to NRNR account. But for credit to FCNR (B), funds should be credited to NRE account and thereafter these funds can be transferred to FCNR (B) account.

Q. 31. After becoming non-resident Indian, interest payable on balances held in unmatured NRE/FCNR (B) time deposits till maturity is exempted from Income-Tax. As per Finance Bill 1994-95 passed recently, banks are instructed to deduct 10% of interest paid plus interest tax as income tax, if the amount of interest paid exceed Rs. 10000/- on deposits received after 1 July 1995?

A. Authorised dealer should not exempt deduction of tax, if the person falls under the category of resident and ordinarily resident (Refer Table No. 9.1)

Q. 32. At paragraph 14 E.7 (ii) of chapter 14 of Exchange Control Manual, it has been stated "On the dealth of a RFC account holder, the balance in the account may be repartriated to the nominees to the extent of his/their entitlement, if on the date of death of the account holder, such nominees to the extent of his/their entitlement, if on the date of death of the account holder, such nominees are resident outside India. "As per rules of nomination facility for resident rupee account, nomination can be made in favour of one person only in individual and joint accounts is it possible to have more than on nominee in the RFC account?

A. As per Notification of Central Government No. F/10/22/90-NRI cell dated 17.7.92 released on 22.9.92, only one nominee can be appointed in individual as well as a joint accounts.

Q.33. RFC account holders can open S.B./C.A account and no cheque book is to be issued. In case of withdrawal for local payment, can bank issue loose cheque leaves for such payment?

A.Withdrawal of local payment can only be made at the request of account holder, so bank can issue loose cheque for making payment to account holder only.

Q. 34. What is the procedure of premature withdrawal of deposits held under RFC-accounts?

A. In absence of guidelines from RBI under RFC scheme, authorised dealers may levy penalty of 1% on premature payment of deposits excepted on conversion to FCNR (B) NRE when the account holder becomes non-resident.

Q. 35. Whether proceeds of repatriable investments in India of non resident Indian are eligible for credit to RFC account?

A. No. Special permission from Reserve Bank of India is required because proceeds of repatriable investment in India do not fall under the category of permitted credits of Resident Foreign currency account scheme.

Q. 36. Whether NRIs residing in erstwhile Bilateral Group can invest in the repatriable investment of shares?

A. Though NRIs residing in erstwhile Bilateral Group of countries are not debarred from making repatriable investment with freely convertible currency in shares directly under section 29 of FERA ECM and notification no. FERA. 150/93-RB dated 26.4.93, but permission from RBI is required to make payment of shares through the said designated branch of the authorised dealers under the portfolio investment scheme. Thereafter, the investor of Bilateral Group counties can invest funds in repatriable shares through stock exchange under portfolio investment scheme. In other cases where the companies issuing shares with repatriation benefits has obtained permission from RBI to issue shares to NRIs of Bilateral group and specifically mention in their prospectus about the eligibility criteria shares can be acquired. In absence of it NRIs residing in erstwhile Bilateral Group should obtain permission of RBI.

Q.37. Can NRIs purchase existing shares/debentures of Indian companies by private arrangement?

A.Yes, RBI permits NRIs on application in prescribed from to purchase shares/debentures of existing Indian companies on non-repatriation basis provided the investee company does not carry on agriculture/plantation activity and/or real estate business.

Q. 38. With the maturity proceeds of FCNR deposits of HUF (overseas corporate body), karta of this HUF intends to start business of marketing of audio visual products by appointing a manager in India, can he start business HUF concern?

A. No, RBI has not permitted HUF concerns constituted abroad to do business in India. However, sole proprietorship concerns are permitted to do business other than agricultural/plantation activity and real estate.

Q. 39. Can NRI invest their funds as loans in partnership concerns in India?

A. Loans to partnership concerns is not permitted, however, NRIs can invest their funds as partners in partnership concern which is not engaged in agricultural/plantation activity or real estate business and intimation of RBI shall be submitted on FORM DIN. The investment and income earned thereon shall be non repatriable.

Q. 40. If any non resident Indian settled temporarily in India purchased residential and commercial lands out of the funds held in RFC account and informed to RBI on application IPI 7 and IPI 8 within 90 days from the date of acquisition will he get repatriation benefits on sale of property if he goes again out Indian for employment?

A. No. Special permission should be obtained from RBI to repatriate the funds outside India.

Q. 41. Can resident Indian open Home Loan account with banks as per guidelines of National Housing Bank (NHB) and raise housing loan for a flat/house?