FEMA
  • Liberalized Remittance Scheme
  • Borrowing And Lending
  • Acquisition and Transfer of Immovable Property – FEMA
  • Banking Accounts
  • Scheme for Foreign Nationals

What is LRS?

Ans. LRS is a scheme introduced by RBI as a step towards further simplification and liberalization of foreign exchange facilities available to RI and also for other persons resident in India (for certain transactions) subject to limits and conditions as specified in FEMA. Currently AD banks allows remittance of all permissible Current/ Capital account transactions up to USD 2,50,000/- per FY (April - March) per RI without RBI permission.

What are the permissible Current account transactions under LRS?

Ans. The following are permissible current account transactions under LRS:
a. Private visit (other than Nepal & Bhutan)
b. Gift or Donation
c. Going abroad for employment
d. Emigration
e. Maintenance of close relatives abroad
f. Travel for business
g. Medical treatment abroad
h. Studies abroad
i. Any other current account transaction

Which Capital account transactions are permissible under LRS?

Ans. The following are the permissible Capital account transactions under LRS:
a. Opening of foreign currency a/c abroad
b. Purchase of property abroad
c. Making investments abroad
d. Setting up Wholly owned subsidiaries and Joint Venture abroad
e. Extending loans in INR to NRIs who are relatives as defined in Companies Act.

Can exchange facility be availed in excess of USD 2,50,000/- for any special purpose?

Ans. Individual may avail of exchange facility in excess of USD 250,000/- as prescribed under LRS in connection with Emigration, medical treatment abroad and studies abroad, subject to other prescribed conditions/ restrictions.

What remittances are permissible under LRS for persons other than RI?

Ans. Persons other than RI can make remittances for:

• Donations to educational institutions;
• Commission to agents abroad for sale of residential flats/commercial plots in India;
• Remittances for consultancy services and
• Remittances for reimbursement of pre-incorporation expenses within the limit and conditions laid down therein.

Such persons shall submit to AD Bank a declaration to the effect that the limits and conditions relating to the remittances have been complied with.

Is LRS in addition to use of International Credit Card by a resident?

Ans. Yes, LRS is in addition to use of International Credit Card. There is no monetary ceiling fixed by RBI for remittances by use of International Credit Card towards meeting expenses while such person is on a visit outside India. However, use of International Credit Card for payment in foreign exchange in Nepal and Bhutan is not permitted.

Is there any restriction on number of remittances during a FY?

Ans. There is no restriction on frequency or number of transactions during a FY. However, total amount of foreign exchange remitted through, all sources in India under LRS  during the current FY should be within LRS limit (currently at USD 250,000/-).

Who is eligible to remit funds outside India under LRS?

Ans. RIs are eligible to avail benefit of LRS. The person must be a person resident in India as per FEMA. Once an individual is a resident under FEMA, he is eligible to avail benefits of LRS, whether or not he is an Indian citizen. Persons other than RIs may be eligible to avail benefits of LRS but only for few transactions subject to limits and conditions as specified in FEMA.

Can a remittance under the LRS be made by a minor?

Ans. Yes, LRS facility is available to all RIs including minors. In case of remitter being a minor, Form A2 may be required to be countersigned by minor’s natural guardian.

A UK passport holder and British Citizen (not of Indian origin), is permanently residing in India for carrying on business. Will he be eligible for availing the LRS even though he is not an Indian citizen?

Ans. Since he is carrying on business in India and living in India, he shall be treated as a person resident in India under FEMA. Hence, he would be eligible for availing LRS even though he is not an Indian citizen.

An Indian passport holder is residing in Singapore for his employment since the last 20 years. Will he be eligible for availing LRS?

Ans. Since he has left India for employment purpose, he shall be treated as a person resident outside India under FEMA. He would not be eligible for availing LRS even though he is an Indian citizen.

Can remittances under LRS be consolidated in respect of family members?

Ans. Remittances under LRS can be consolidated in respect of family members (including minors) subject to individual family members complying with LRS terms and conditions. However, clubbing is not permitted by other family members for capital account transactions such as opening a bank a/c/ investment/ purchase of property, if they are not the co-owners/ co-partners of overseas bank a/c, investment/ property.

Is it mandatory for RI to have PAN for outward remittance under LRS?

Ans. It is mandatory to have PAN to make remittances under LRS. As per a recent RBI circular, PAN is now also required for remittances made towards permissible current account transactions up to USD 25,000/- (earlier, PAN was not required for such current account transactions).

What is not permitted under LRS?

Ans. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges/ overseas counterparty are not allowed under LRS.

Are RI under LRS required to repatriate back to India the accrued interest/ dividend on deposits/ investments abroad, over and above the principal amount?

Ans. At present, RIs are not required to repatriate the funds or income generated out of the investments made abroad under LRS.

A RI, intends to give loan abroad by using LRS? Can he do so?

Ans. Yes, a RI can give loan to relatives (as defined under the Companies Act) abroad by using LRS as giving of loans is a permissible capital account transaction.

Can an individual, who has availed of a loan abroad while a NRI can repay the same on return to India, under LRS as resident?

Ans. Yes.

A RI has gifted an amount of USD 1,50,000 to his daughter in USA in October 2017. He intends to gift another amount of USD 1,00,000 to his son in UK before March 2018. Can he do so?

Ans. Yes, since the RI has partly utilized the limit of USD 250,000/-, he can gift an additional amount of up to USD 1,00,000/- before 31st March 2018. No further remittances shall be permitted in FY 2017-18 since the LRS limit has been utilised.

A RI has gifted an amount of USD 250,000 to her daughter in USA in December 2017. She intends to remit additional amount of USD 50,000/- to her daughter for her maintenance before March 2018. Can she do so?

Ans. No. She cannot remit additional amount of USD 50,000/- to her daughter (a close relative). In accordance with regulations governing current account transactions remittance for maintenance of close relative abroad has also been subsumed under the LRS limit. Hence, limit of USD 250,000/- shall be applicable in case of gift to close relatives too.

A RI intends to gift another RI in foreign currency by credit to latter’s foreign currency a/c held abroad, under LRS. Can he do so?

Ans. No. A RI cannot gift to another RI in foreign currency, for the credit of latter’s foreign currency a/c held abroad under LRS.

What is the procedure to remit funds under the LRS?

Ans.
i.   Approach AD Bank and notify them that you would like to engage in an outward remittance under LRS.
ii.  Application cum declaration for purchase of foreign exchange under LRS of USD 250,000.
iii. Form A2 will be presented to you in addition to requisite documentation. Form A2 is a declaration form. Under the form, you are required to attest that you have not breached the limit of USD 250,000 per FY and state the purpose of the remittance. Form 15CA/CB is not mandatory under LRS transactions.
iv. Apart from above, request for release of foreign exchange is to be given to AD Bank in case of transfer of funds overseas (application to release forex).
v.  Other AD Bank specific requirements. 

To whom can a RI remit for the purpose of "maintenance of close relatives"?

Ans. Funds can be remitted to below mentioned relatives as defined in the Companies Act:
• Members of Hindu undivided family; or
• RI’s spouse
• RI is related to the beneficiary in any of the manners indicated below:

1.Father (including step-father)

2.Mother (including step-mother)

3.Son (including step-son)

4.Son's wife

5.Daughter

6.Daughter's husband

7.Brother (including step-brother)

8.Sister (including step-sister)


Can RI lend money to his close relative NRI/PIO?

Ans.   Yes, a RI can lend money in Rupees to his NRI relative (as defined by Companies Act) by way of crossed cheque /electronic transfer within the overall limit of USD 2,50,000/- per FY under LRS. The loan should be interest free and have a maturity of minimum 1 year. Repayment of loan shall be made by way of inward remittances from outside India or by debit to NRE/NRO/FCNR (B) a/c of the NRI relative or out of the sale proceeds of shares/securities/immovable property against which such loan was granted.   


What are the restrictions on the end use of the funds that a RI has lent to NRI relative?

Ans. The loan in Rupee shall be utilised for meeting the NRI relative’s personal requirements or for NRI relative’s own business purposes in India. It shall not be utilised for any of the activities in which investment by a NRI is prohibited, namely:

the business of chit fund, or
Nidhi Company, or
agricultural or plantation activities or in real estate business*, or construction of farm houses, or
trading in Transferable Development Rights.

*restriction on real estate does not include development of townships, construction of residential/ commercial premises, roads or bridges.

In the above case, who is responsible to ensure that amount of loan is within limits prescribed under LRS during the FY?

Ans. It would be the responsibility of the lender (i.e. RI) to ensure that amount of loan is within the limits prescribed under LRS during the FY.

Further, to the above question are there any restrictions on end use of the borrowed funds?

Ans.

Funds borrowed in rupees from NRI close relative shall be utilized by Resident Indian for his own business purpose only other than certain specified businesses*. He is not permitted to utilize the loan funds for any investment, whether by way of capital or otherwise, in any company/ partnership firm/ proprietorship concern or any entity, or for relending.
* the business of chit fund, as Nidhi Company, agricultural or plantation activities or real estate business; or construction of farm houses, or trading in Transferable Development Rights. 
Provided that RBI may permit such resident entities/ companies to use such borrowed funds:
(a) For on lending/ re-lending to the infrastructure sector; or
(b) For keeping in fixed deposits with banks in India pending utilization by them for permissible end-uses.

Can a NRI avail loan from AD Bank in India?

Ans. Yes, NRI is permitted to avail loan from AD Bank in Rupee subject to certain specified restrictions and:
-against the security of shares and others held in name of NRI, or
-against security of immovable property (other than agricultural land / plantation property / farm house) held by NRI in accordance with RBI regulations


Can a RI repay loans of close relative NRI to AD Banks in India?

Ans.

Yes, where a Bank in India has granted loan to a NRI such loans may also be repaid by any relative (as defined under the Companies Act), of NRI by crediting the borrower's loan a/c through the bank a/c of such relative.

Can a RI borrow money in Rupee from NRI?

Ans. A RI may borrow in Rupee from NRI relative on non-repatriation basis after satisfying the following terms and conditions:
-Loan shall be received by way of inward remittance from outside India or out of NRE/ NRO/ FCNR (B)/NRNR/NRSR a/c of NRI maintained with an authorised dealer or an AD Bank in India.
 -The period of loan shall not exceed 3 years and rate of interest shall not be more than 2% above the bank rate prevailing on date of availment of loan.
-The repayment of loan amount along interest thereof shall be made only to the NRO account of the NRI
-The borrowed amount is not permitted to be repatriated outside India.

Can a RI borrow money in foreign currency from NRI?

Ans. Yes, an individual resident Indian can borrow in foreign currency, a sum not exceeding USD 250,000/- or its equivalent from his close relatives NRE outside India, subject to following conditions:
 -minimum maturity period of loan is 1 year;
-loan is free of interest; and
-amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debit to NRE/FCNR a/c of NRI. 


A NRI wants to avail loan against her NRE FDs. Is she permitted to do so?

Ans. She can freely avail loan/ overdraft against securities of her NRO/NRE FDs in India without any monetary ceiling subject to end-use conditions as specified under FEMA.

Can a RI and a friend of NRI take loans against the NRO FD of NRI?

Ans. Third-party being RI, firms or companies resident in India can avail loan/overdraft against security of NRO deposits for personal/business purposes, subject to stipulated terms and conditions.However, loan amount cannot be utilized for relending, agricultural/plantation activities or real estate business. 



Can NRI obtain loan from their Banks for acquiring ESOPs?

Ans. Yes, NRI is permitted to acquire loan in INR from the Bank till the extent of 90% of the purchase price in INR of the ESOPs or Rs. 20 lakhs per NRI employee whichever is lower. The loan amount shall be directly paid to the company and should not be credited to NRI’s non-resident a/c in India. Additional conditions have been laid down by RBI for the same.


When a NRI uses his credit card, will it be considered as borrowing in India?

Ans. It is clarified that use of credit card in India by a person resident outside India shall not be deemed as borrowing or lending in rupees.

Can INR loan/ overdraft granted to RI who subsequently becomes a person resident outside India be continued?

Ans. An AD Bank may allow continuance of loan/ overdraft granted to a person resident in India who subsequently becomes a person resident outside India, subject to following terms and conditions:
• AD Bank is satisfied, according to his/ its commercial judgment, about the reasons to continue the loan or overdraft;
• The period of loan or overdraft shall not exceed the period originally fixed at the time of granting the loan/ overdraft;
• So long as the borrower continues to a remain a person resident outside India, the repayment shall be made either by inward remittance from outside India through normal banking channels or from the funds held in NRE/ FCNR(B)/ NRNR/ NRO/ NRSR a/c of the borrower.

Can INR loan be continued in the event of change in residential status of the lender?

Ans. In case INR loan was granted by a person resident in India to another person resident in India and the lender subsequently becomes a non-resident, the repayment of loan by the resident borrower should be made by credit to NRO a/c of the lender maintained with AD bank in India, at the option of the lender.

Can Indian Companies borrow from NRIs?

Ans. No. As per FEMA provisions, Indian Company is not permitted to avail loan from NRI. Alternatively, NRIs can provide deposits to Indian company or invest in Non-convertible Debentures offered by the Company.


Under general permission by RBI, NRIs and OCIs are permitted to purchase immovable property in India as under:

Ans.

 

Particulars

FAQ No.

Purchase from (other than agricultural land/ farmhouse/ plantation etc)

Resident/ NRI/ OCI - [c]

Acquire as gift From (other than agricultural land/ farmhouse/ plantation etc)

Resident/ NRI/ OCI - [f] who is a relative

Acquire (any IP) as inheritance from

a. Any person who has acquired it under laws in force-  [g,h];
b. Resident-  [g]

Sell (other than agricultural land/ farmhouse/ plantation etc) to

Resident/ NRI/ OCI - [n]

Sell (agricultural land) to

Resident-  [o]

Gift (other than agricultural land) to

Resident/ NRI/ OCI-  [p]

Gift (agricultural land) to

Resident-  [p]

Gift residential/ commercial property

Resident/ NRI/ OCI-  [p]

 

Are any documents required to be filed by the above NRI/OCI with the RBI after the purchase?

Ans. NRI/OCI who has purchased residential / commercial property under general permission is not required to file any documents with RBI.

How many residential / commercial properties can NRI / OCI purchase under the general permission?

Ans. There are no restrictions on the number of residential / commercial properties that can be purchased. However, they can repatriate sales proceeds of only 2 residential properties outside India.

Can a foreign national of non-Indian origin and resident outside India purchase immovable property in India?

Ans. No. A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India. But, he may take residential accommodation on lease provided the period of lease does not exceed 5 years. In such cases, there is no requirement of taking any permission of or reporting to RBI. However, he is permitted to acquire one immovable property (other than agricultural land / plantation property / farm house) jointly with his spouse, provided the spouse is NRI or OCI and otherwise not prohibited from such acquisition and their marriage should have been registered and subsisted for a continuous period of not less than two years immediately preceding the acquisition of such property.

Can a foreign national being employed in India, and thus being a person resident in India as per FEMA acquire an immovable property in India?

Ans. a.Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or Democratic People’s Republic of Korea (DPRK), irrespective of their residential status, cannot, without prior permission of RBI, acquire or transfer immovable property in India, other than on lease, not exceeding 5 years. This prohibition shall not be applicable to an OCI.
b.Foreign nationals of non-Indian origin resident in India (except 11 countries listed at (a) above) can acquire immovable property in India.
c.Foreign nationals of non-Indian origin resident outside India can acquire/ transfer immovable property in India, on lease not exceeding 5 years and can acquire immovable property in India by way of inheritance from a resident.


Can a NRI/ OCI/ Foreign national acquire immovable property in India by way of gift?

Ans. Yes, NRIs/OCI; only can freely acquire immovable property (residential and commercial properties only) by way of gift either from a person resident in India, a NRI or OCI who is a relative defined in section 2(77) of the Companies Act,2013. However they are not permitted to acquire an agricultural land / plantation property / farm house in India by way of gift.
A foreign national of Non-Indian origin resident outside India cannot acquire any immovable property in India by way of gift

Can a non-resident inherit immovable property in India?

Ans. Yes, a person resident outside India (NRI/OCI) can inherit and hold immovable property in India from a person resident in India or Person resident outside India. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong and Democratic People’s Republic of Korea should seek specific approval of RBI.

A non-resident has inherited an agricultural land in India from his father who was also a non-resident. Is he permitted to inherit such land from a non-resident?

Ans. Yes, he is permitted to inherit agricultural land property from his father who was also a non-resident provided the father had acquired the property in accordance with the Foreign Exchange laws in force. 

Suppose a NRI/OCI acquired agricultural land by way of inheritance, to whom can such property be transferred?

Ans. The NRI/OCI may transfer agricultural land/ farm house/ plantation property in India, by way of gift or sale to a person resident in India, who is a citizen of India.

How can NRI / OCI make payment for purchase of residential / commercial property in India?

Ans. Payment can be made by NRI / OCI only out of funds remitted to India through normal banking channels or funds held in NRE / FCNR / NRO a/c maintained in India. Payments cannot be made through travellers’ cheque or foreign currency note.


Can NRI / OCI avail housing loan from an AD or financial institutions in India?

Ans. Yes, NRI/ OCI are permitted to obtain housing loans subject to conditions listed below:
a.The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person resident in India;
b.The loan amount shall not be credited to NRE/ FCNR/ NRNR a/c of the borrower;
c.The loan shall be fully secured by equitable mortgage of the property proposed to be acquired, and if necessary, also by lien on the borrower’s other asset in India;
d.The installment of loan, interest and other charges, if any, shall be paid by remittances from outside India or out of funds in NRE/ FCNR/NRNR/NRO/NRSR a/c of the borrower in India;
e.The rate of interest on the loan shall be as per directions by the RBI and/or National Housing Bank. 

What are the ways to repay housing loan availed as per Q. k?

Ans. Housing loan can be repaid:
a.by way of inward remittance through normal banking channel; or
b.by debit to the NRE / FCNR / NRO a/c of the NRI / PIO; or
c.out of rental income from such property; or
d.by the borrower's  relatives, through their bank a/c in India by crediting the borrower's loan a/c.

Can NRI avail of housing loan in rupees from his employer in India?

Ans. Yes, subject to certain terms and conditions.

Can a NRI sell immovable property other than agricultural land in India?

Ans. He may sell to a person resident in India/ NRI/ OCI.

Can NRI eligible to sell an agricultural land, in case the same was purchased by him while he was a Resident?

Ans. Yes, he is eligible to sell an agricultural land, even if the same was purchased by him while he was a Resident.

Can a NRI/ OCI gift his immovable properties?

Ans. Residential /Commercial property: NRI / OCI may gift residential/ commercial property to a relative (define in section 2(77) of the companies Act, 2013) person resident in India, NRI or OCI.  Foreign national of non-Indian origin requires prior approval of RBI for gifting the residential / commercial property.Agricultural land / a plantation property / a farm house:  NRI / PIO can gift the above only to a person resident in India who is a citizen of India. A foreign national would require prior approval of RBI.

Can residential / commercial property be mortgaged?

Ans. NRI/ PIO can mortgage to
i. AD Bank/ housing finance institution in India- without RBI approval
ii. A party abroad- with RBI prior approval
A foreign national of non-Indian origin can mortgage only with RBI prior approval
A foreign company which has established a Branch Office or other place of business in accordance with FERA/ FEMA
regulations has general permission to mortgage the property with an AD Bank in India.


PIO has acquired residential/ commercial property in India by way of inward remittances through normal banking channel or by debit to NRE /FCNR/ NRO a/c. Can he repatriate the sale proceeds of the same? If yes, is there any limit on the quantum?

Ans. Yes, he may repatriate sale proceeds of immovable property subject to below conditions:

Amount to be freely repatriated should not exceed amount paid for acquisition of residential/ commercial property in foreign exchange, received through normal banking channel or by debit to FCNR a/c or NRE a/c.

•In case of residential property, repatriation of sale proceeds is restricted to 2 such properties

•Sale proceeds of residential/ commercial property in India acquired by way of debit to NRO a/c cannot be freely repatriated and sale proceeds should be credited to NRO a/c only. However, such sale proceeds can be transferred from NRO a/c to NRE a/c/ overseas a/c subject to the limit of USD 1 million per FY 


Is there requirement of minimum holding period for sale of residential/ commercial property purchased out of inward remittance/ debit to NRE/ FCNR a/c?

Ans. There is no requirement of minimum holding period applicable for sale of such property.

NRI acquired an immovable property by way of gift. Can the funds received on sale of said immovable property be repatriated abroad?

Ans. The sale proceeds of immovable property acquired by way of gift should be credited to NRO a/c only. From balance in NRO a/c, NRI/OCI may remit up to USD 1 million, per FY, subject to satisfaction of AD Bank and payment of applicable taxes.

If immovable property was received as inheritance by NRI/OCI from a person resident in India, can he repatriate the sale proceeds?

Ans. Yes, general permission is available to repatriate such sale proceeds. The amount of repatriation is restricted to USD 1 million per FY, subject to satisfaction of AD Bank and payment of applicable taxes.

In case of a foreign national, sale proceeds can be repatriated in similar manner if the property is inherited from a person resident in India.

Foreign nationals of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau and Hong Kong or Democratic People’s Republic of Korea (DPRK) require prior RBI approval. Repatriation of sale proceeds in foreign exchange to Nepal and Bhutan is not permissible.

If the immovable property was received as inheritance by foreign national from a person resident outside India, can he repatriate the sale proceeds?

Ans. Yes, but only with prior RBI. 

Can NRI / OCI rent residential/ commercial property purchased from foreign exchange/ rupee funds?

Ans. Yes, NRI/OCI can rent the property without RBI approval. 

Can foreign nationals of non-Indian origin resident in India or outside India who had earlier acquired immovable property under FERA with specific approval of RBI continue to hold the same? Can they transfer such property?

Ans. Yes, they may continue to hold the immovable property under holding license obtained from RBI. However, they can transfer the property only with prior RBI approval.

What accounts can an NRI open in India?

Ans. NRI may hold bank accounts in India only with AD bank. The AD Bank in India may accept deposits from NRI under the following schemes:

i. Non-Resident (External) Account (NRE) Scheme in Indian Rupees
ii. Non-Resident (Ordinary) Account (NRO) Scheme in Indian Rupees
iii. Foreign Currency Non-Resident (FCNR) in Foreign Currency
iv. Special Non-Resident Rupee Account (SNRR)

Features of various Deposit Schemes available to NRIs:

                                    

Particulars

FCNR a/c

NRE a/c

NRO a/c

SNRR a/c

Who can open an account?

NRI & PIO1

NRI & PIO1

Any person resident outside India 2

Any person resident outside India 2

(who has business interest in India)

Type of Account

Term Deposit only

Savings, Current, Recurring, Fixed Deposit

Savings,Current, Recurring, Fixed Deposit

Current a/c

Nomination

Permitted

Permitted

Permitted

Permitted

Repatriation

Freely repatriable

Freely repatriable

Current income is freely repatriable, provided all taxes are duly paid. Amounts other than current income can be repatriated to the extent of USD  1 million per FY

(Also refer Chapter 3: Repatriation)

Repatriable subject to payment of applicable taxes

Taxability on

Interest earned exempt under section 10(15) (iv) (fa) of the Act.

Interest earned is exempt under section 10(4) of the Act.

Interest earned is Taxable. TDS @ 30.9% or as per DTAA rate whichever is beneficial, provided mandated documents are submitted.

Not an Interest bearing account.

Currency

Foreign Exchange

Rupees

Rupees

Rupees


1. For the purpose of the said FEMA regulation, PIOs do not include nationals of Pakistan,  Bangladesh or such country as may be specified by Government.

2. Individuals/ entities of Pakistan and Bangladesh require prior approvals and/or permits, from relevant authorities.  

NRI holds NRO, NRE and FCNR a/c with a AD Bank. He intends to add his sister a resident Indian as a joint holder. Is it permissible?

Ans. Yes. NRO a/c can be maintained jointly with a resident of India on former or survivor basis. On the other hand, NRE and FCNR a/c can be maintained jointly with resident relative (as per Companies Act) only i.e. a resident non-relative cannot be a joint holder. 


Can the NRI’s sister operate his Bank accounts?

Ans. No, the sister shall be eligible to operate the a/c only if she is a POA holder as per the instructions of NRI account holder.

Operations in FCNR, NRE and NRO a/c by his sister as a POA holder is restricted to the following:

• Withdrawals for permissible local payments including payments for eligible investments subject to relevant compliances
• Remittance to the account holder himself (i.e. NRI in this case) through normal banking channels


Whether NRO, NRE and FCNR a/c can be opened by a resident POA holder?

Ans. No. NRO, NRE and FCNR a/c cannot be opened by resident POA holder in India on behalf of NRI. 


Are NRIs permitted to be joint holders to the accounts held by resident Indians?

Ans. Yes. Relatives (as per Companies Act) who are NRIs are permitted to be joint holders in existing / new resident bank accounts with the resident account holder on “Either or Survivor” basis as per the conditions prescribed. 


Can NRI account holders avail Rupee loans in India from Banks against security of funds held in their FCNR and NRE a/c?

Ans. Yes, under FEMA regulations, NRIs can avail loan from Banks in India without any ceiling subject to usual margin requirements. The loan amount can be utilized by NRI only for the following purposes:

• Personal purposes or for carrying on business activities. The loans cannot be utilized for the purpose of ‘relending’ or for carrying on agriculture, plantation activities or for investment in real estate business.
• Capital contribution in Indian firms / companies.
• Acquisition of flat / house in India for his ‘own’ residential use. 


Can NRI account holders avail Rupee loans in India from Banks against security of funds held in their NRO a/c?

Ans. Yes. Under FEMA regulations, the loan can be utilized for personal and business purposes except for the purpose of ‘relending’ or for carrying on agriculture, plantation activities or for investment in real estate business.


Can NRIs avail loans outside India against security of funds held in their FCNR / NRE a/c?

Ans. Yes, NRIs can avail loan from branches / correspondent Banks outside India for bonafide purposes.

Can a NRI overdraw his NRE a/c?

Ans. AD Banks may at their discretion/ commercial judgement allow over drawings in NRE a/c up to a limit of Rs. 50,000/- subject to the condition that such over drawings together with the interest payable thereon are cleared/repaid within a period of 2 weeks, out of inward remittances through banking channels or by transfer of funds from other NRE/ FCNR a/c.


What are permissible transactions in NRE a/c and FCNR a/c:

Ans.

Permissible Credits

Permissible Debits

· Remittances to India in any permitted currency

· Personal cheques drawn, traveller’s cheques, bank drafts in permitted currency

· Proceeds of foreign currency/bank notes during temporary visit to India   

· Transfers from other NRE/ FCNR a/c

· Interest accruing on the funds held in the account

· Current income in India (subject to tax payment)

· Maturity proceeds of any permissible investment originally made from NRE/ FCNR a/c

· Refund of share/ debenture subscriptions of to new issues of Indian companies if original subscription was made from NRE/FCNR a/c

· Refund of application/ earnest money/ purchase consideration on non-allotment/cancellation from builder/ developer (with interest) provided original payment was made from NRE/FCNR a/c

· Any other credit if covered under general or special RBI permission

· Local disbursements

· Remittances outside India

· Transfer to NRE/ FCNR a/c of   the account holder or any other person

· Investment in shares/securities/ commercial paper of an Indian company or for purchase of immovable property in India

· Any other transaction if covered under general or special RBI permission

 

What are the permissible transactions in NRO a/c:

Ans.

Permissible Credits

Permissible Debits

· Proceeds of remittances received in any permitted currency from outside India

· Permitted currency tendered during his temporary visit to India or transfer from Rupee accounts

· Legitimate dues in India

· Transfers from other NRO accounts

· Any amount received in accordance with RBI regulations

 

· All local payments in rupees including payments for investment subject to compliance with RBI regulations  

· Remittance outside India of current income in India of the account holder net of applicable taxes

· Transfers to other NRO a/c

· Settlement of charges on International Credit Card issued by AD Banks (subject to limits for repatriation)

What are conditions and permissible transactions in SNRR a/c:

Ans. • SNRR a/c can be opened only by a person resident outside India who has business interest in India.

• The SNRR a/c should carry the nomenclature of the specific business and balances in such a/c should commensurate with the operations

• The operation of such a/c should not result in the account holder making available foreign exchange to a resident of India against reimbursement in rupees

• The debits and credits in SNRR a/c should be specific/ incidental to the business proposed to be done by the account holder.

• Transfers from NRO a/c to SNRR a/c are prohibited.

• The tenure of SNRR a/c should be concurrent to the tenure of contract/ period of operation/ business of the account holder and in no case the period should exceed 7 years from the date of opening of the account.

• Transactions in SNRR a/c should be reported to RBI as per directions issued


Can the AD banks issue International Credit cards to NRIs/ PIOs without prior approval of RBI?

Ans. AD Banks can issue International Credit Cards to NRIs/ PIOs without prior approval of RBI. Such transactions may be settled by inward remittance or out of balances held in the NRI/PIO’s NRO/ NRE/ FCNR a/c. 

Can foreign tourists on short visit open a bank a/c in India?

Ans. Yes. Foreign tourists of non-Indian origin during their short visit to India can open a NRO a/c (Current / Savings) with AD Bank dealing in foreign exchange. Such a/c can be opened up to a maximum period of 6 months.

What credits can be made to such a/cs?

Ans. Funds remitted from outside India through banking channels or those obtained by sale of foreign exchange brought by tourists to India can be credited to NRO a/c.

Can the NRO a/c be used for making local payments?

Ans. Yes. Tourists can freely make local payments through NRO a/c.

Can foreign tourists repatriate the balance held in their NRO a/c at the time of departure from India?

Ans. AD Banks have been allowed to convert the balance in account for payment to the account holder at time of departure from India into foreign currency, provided the account has been maintained for a period not exceeding 6 months and account has not been credited with any local funds, other than interest accrued thereon.

Can foreign nationals resident in India open a resident a/c?

Ans. Yes. Foreign nationals employed in India holding valid visas can open and maintain a resident Rupee a/c in India subject to conditions.

Can AD Banks remit proceeds on closure of resident a/c opened by a foreign national resident in India to his overseas a/c?

Ans. Yes, AD Banks can remit proceeds of resident a/c opened by a foreign national resident in India (subject to payment of taxes). However, AD Banks should ensure that the funds to be repatriated outside India were either received from abroad or they are repatriable in nature or permissible by RBI.
In order to facilitate such foreign nationals to collect their pending dues, AD Banks may, permit foreign nationals to re-designate their resident a/c maintained in India as NRO a/c on leaving the country after their employment to enable them to receive their pending bonafide dues, subject to conditions.

How much foreign exchange can be brought in while visiting India?

Ans. A person coming to India from abroad can bring foreign exchange without any limit. However, if aggregate value of foreign exchange in the form of currency notes, bank notes or traveller’s cheques brought in exceeds USD 10,000 or its equivalent and/ or the value of foreign currency alone exceeds USD 5,000 or its equivalent, it should be declared to Customs Authorities at the Airport in Currency Declaration Form (CDF) on arrival in India.