Académique Documents
Professionnel Documents
Culture Documents
MINOR REPORT
On
NRI Banking
Supervised by:-
Submitted by:-
Harsh Mohan
Roll NO. -01914901815
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NRI Banking
CERTIFICATE
This is to certify that the project titled NRI Banking submitted by HARSH MOHAN to
MAHARAJA SURAJMAL INSTITUTE, GURU GOBIND SINGH INDRAPRASTHA
UNIVERSITY in partial fulfillment of requirement for the award of the Bachelor of Business
Administration Degree is an original piece of work carried out under my guidance and may be
submitted for evaluation.
The assistance rendered during the study has been duly acknowledged.
No part of this work has been submitted for any other degree.
Dated:
Faculty Guide
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ACKNOWLEDGEMENT
Any accomplishment requires the effort of many people and this work is not different.
Regardless of the source, I wish to express my gratitude to those who may have contributed to
this work, even though anonymously.
First I would like to express my deepest sense of gratitude to MAHARJA SURAJMAL
INSTITUTE for providing me with an opportunity for training and encouragement in conducting
the research work.
I would like to pay my sincere thanks to my project guide, Dr. Supriya Chaudhary under
whose guidance I was able to complete my project successfully. I have been fortunate enough to
get all the support, encouragement and guidance from her needed to explore, think new and
initiate.
My final thank goes out to my parents, family members, teachers and friends who encouraged
me countless times to persevere through this entire process.
HARSH MOHAN
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Chapter
No.
01
02
03
TOPIC NAME
Page No.
Introduction
07
08
Research Methodology
09
Scope
10
Limitations
11
13
Who is an NRI?
14
15
Types of accounts
16
20
23
24
Management Act,1999
FEMA Definition
24
NRE Account
28
31
NRO Account
32
Income Tax
36
37
NRI Banking
04
05
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38
41
NRI Investments
43
46
Demat Account
48
51
52
Questionnaire
55
57
Conclusion
58
Bibliography
59
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CHAPTER-1
1.1 INTRODUCTION
1.2 OBJECTIVES OF THE STUDY
1.3 RESEARCH METHODOLOGY
1.4 SCOPE
1.5 LIMITATIONS
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1.1 Introduction
NRI Banking is becoming popular among the Non-resident customers. As India is showing
progress more & more NRI investing in the country. Banks should try to give their top class
service to the NRIs as they are looking for convenience, speed, high yield on investments with
manageable risk, reasonable cost & quality services.
Bank should lower the minimum balance requirement which is Rs.50,000 for NRIs as compared
to resident who have to keep Rs.1000. The documentation procedure in case of opening of a/c in
banks, investing in any property, for buying shares & debt. should be reduced and in case of loan
at a faster speed.
The services of banks should be fast, accurate & upto the standard as they have to face
competition not only from the local banks but also from the banks based overseas.
Banks should also extend their services by providing ATMs abroad, E -banking with efficient
facility & balance inquiry message through mobilizes.
Investment of NRI would help to bring more inflow of foreign exchange through taxes &
investment policy & this would help Indian government to repay its debt to the World Bank.
Indian government should give their best services & efforts to encourage NRI to invest in India.
This would help our economy to flourish & grow in future.
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1.5 Limitations
Nobody should underplay the risks associated with excessive exposure to one source of
financing be it commercial borrowing or NRI deposits, says AK Bhattacharya.
How critical have non-resident Indians or NRIs
become to the Indian economy? An answer to
this question is in the latest external debt report
released by the Union finance ministry.
At the end of March 2014, NRI deposits (there
are now three types of deposits and all of them
have a locking period of over a year and hence
are not classified as short-term debt) in the
country were estimated at $104 billion.
Just three years ago, at the end of March 2011,
NRI deposits were only $52 billion, half of what they are today. They rose to $59 billion a year
later and to $71 billion by the end of March 2013. The sharpest increase in these deposits
occurred in 2013-14. The finance ministry's report attributes this rise to the mobilisation of fresh
foreign currency nonresident (bank) or FCNR(B) deposits by commercial banks under the
special swap scheme offered by the Reserve Bank of India during September-November 2013 a
move that helped shore up the rupee and build India's foreign exchange reserves.
A consequence of this successful strategy was the increase in the importance of NRI deposits.
For instance, NRI deposits now account for almost a quarter of India's total external debt,
standing next only to external commercial borrowings, which have the largest share at about a
third of India's total external debt of $441 billion. Between 2011 and 2013, NRI deposits' share
in total external debt hovered around 1617 per cent, showing once again how the spurt took place
in one year. The rising importance of NRI deposits gets reinforced even more emphatically when
you look at these numbers from a different perspective. For instance, in 2011-12, the share of
NRI deposits in the country's total net capital flows was 17.6 per cent and came down marginally
to 16.6 per cent the following year. But in 2013-14, it went up dramatically to 79.7 per cent. The
debt flows are used largely to meet the current account deficit and their use increases during a
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period of crisis when other sources of financing like the foreign institutional investments tend to
dry up a bit.
That is also why in 2008-09, the share of NRI deposits in India's net capital flows went up to
58%.
But it is important to note that India's reliance on NRI deposits has been on the rise, particularly
in crisis years, even as the share of external assistance in total capital flows has come down to a
trickle at around one to three per cent in the last three years.
There are, of course, many good reasons for NRIs to park their money in India in the three
schemes that are now in operation.
Clearly, they earn a little more from these deposits than they can hope to get in developed
economies, where such schemes will earn them much less.
Such deposits are also a reflection of their confidence in the Indian economy, its growth potential
and financial system, where their money is not only safe but can also get good returns.
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CHAPTER-2
NRI Banking An Introduction
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this Scheme
entitles the PIOs to a wide range of economic, financial, educational and cultural benefits. The
benefits envisaged under the Scheme include: No requirement of visa to visit India;
No requirement to register with the Foreigners Registration Officer if continuous stay does
not exceed 180 days. If continuous stay exceeds 180 days, then registration is required to be
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done within a period of 30 days of the expiry of 180 days;
Parity with Non-Resident Indians in respect of facilities available to the latter in economic,
financial, educational fields etc. These facilities ill include:
Acquisition, holding, transfer and disposal of immovable properties in India except of
agricultural/plantation properties;
Admission of children in educational institutions in India under the general category quota for
NRIs- including medical/engineering colleges, IITs, IIMs etc.
Various housing schemes of Life Insurance Corporation of India, State Governments and
other Government agencies;
All future benefits that would be extended to NRIs would also be available to the PIO Card
holders;
However, they shall not enjoy political rights in India.
NRE A/C
FCNR-B A/C
NRO A/C
RFC A/C
NRI accounts are maintained by banks which hold authorized dealers' licences from the
Reserve Bank of India. Some cooperative and commercial banks have also been specifically
permitted to maintain NRI accounts in rupees even though they are not authorized dealers. The
financial budget for 2007-08 extends NRI accounts to regional rural banks (RRBs) as well. This
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would boost remittances from NRIs particularly in Bihar, Kerala, Uttar Pradesh and Gujarat
where a large number of persons from rural areas from these states are employed overseas.
Banking Laws for NRIs allow for accounts with authorized dealers to be maintained in Indian
rupees and in foreign currency.
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Repatriable Accounts
Funds that can be transferred or repatriated abroad are
maintained in a Non Resident External Bank account.
Generally, funds remitted from outside India are credited to
this account. Investments made from foreign funds can be
repatriated overseas, and such investments are maintained
in a Repatriable Demat account.
Pound Sterling,
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3. NRO Accounts
Only current earnings are repatriable.
Savings NRO accounts are normally operated to credit rupee income from shares, interest,
rent from property in India, etc.
In case of term deposits, banks are allowed to determine their own interest rates.
Banks can allow remittance up to USD 1 million per financial year for bonafide purposes from
balances in the NRO accounts once taxes are paid out. This limit includes the sale proceeds of
immovable properties held by NRIs and PIOs.
Non-Repatriable Accounts
Non-repatriable funds are those which cannot be taken out of India. These have to be maintained
in a separate bank account i.e. a Non Resident Ordinary Bank account. Investments made from
non-repatriable accounts cannot be repatriated but have to be maintained in a Non-Repatriable
Demat account. Money once transferred from an NRE account to an NRO account cannot be
transferred back to a NRE account.
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deposits. NRIs can also open NRO accounts for depositing their funds from local transactions.
The interest earned from NRO accounts is accountable to tax laws.
NRO accounts can be opened in the name of NRIs who have left India to take up employment
or business temporarily or permanently in a foreign country.
Funds from NRO accounts are n ot repatriable or transferred to NRE accounts without the
prior approval of the RBI.
However, NRIs, PIOs, Foreign Nationals, retired employees or non-resident widows of Indian
citizens can remit, through the Authorized Dealer, up to USD one million per calendar year from
the NRO account or from income from sale of assets in India
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Minimum balance in which one can open an account (Differs from bank to
bank):NRO Saving Account Rs.5,000/NRO - Current Account Rs.10,000/NRO Term Deposit Account Rs.5,000/NRE Savings Account Rs.5,000/NRE Current Account Rs.10,000/NRE Term Deposit Account Rs.10,000/FCNR Term Deposit Account USD 500/- or its equivalent in GBP or Euro
If you submit the money for opening/credit to an account. Frequency of Interest payment on
accounts:
NRO Term Deposit Account Half yearly
NRE Savings Account Quarterly
NRE Term Deposit Account Half yearly
FCNR Term Deposit Account Quarterly
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Resident Indians
Resident Indians
NRO
Yes
Yes
NRE
No
Yes
FCNR
No
Yes
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CHAPTER-3
Literature of NRI Banking
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An Indian abroad is popularly known as an NRI but the same has two important definitions one coined under the Foreign Exchange Management Act, 1999 [FEMA] and the other as per
the Income Tax Act, 1961.
is the one
Management Act, 1999 [FEMA], which has replaced the Foreign Exchange Regulation Act ,
1973- [FERA] with effect from June 1,2000.
Person Residing outside India is the term used for an NRI, being a person who has gone
out of India or who stays outside India for the purpose of employment or carrying on
business or vocation outside India or any other circumstances which indicate his intention
to stay outside India for an uncertain period.
NRI Banking
A person residing in India for more than one hundred and eighty-two days during the course
of the preceding financial year but does not include
A person who has gone out of India or who stays outside India, in either case
(a)For or on taking up employment outside India, or
(b)For carrying on outside India a business or vocation outside India, or
(c)For any other purpose, in such circumstances as would indicate his intention to stay
outside India for an uncertain period;
A person who has come to or stays in India, in either case, otherwise than
For any other purpose, in such circumstances as would indicate his intention to stay in India
for an uncertain period;
A Foreign Citizen of Indian origin residing outside India are defined as Non-Resident Indians.
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A person, being a citizen of any country other than Pakistan and Bangladesh,
who at any
a person who himself or either of his parents or any of his grandparents were citizens of India,
or
2(xii) 'Person of Indian Origin' means a citizen of any country other than Bangladesh or Pakistan,
if
he or either of his parents or any of his grand- parents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955) or
This definition is further narrowed when it comes to rules regarding acquisition and transfer of
immovable property in India. Probably with an intention of ensuring & restricting control of
immovable properties in the hands of strictly defined persons of Indian Origin only, this
definition is further narrowed to exclude individuals being citizens of Pakistan, Bangladesh, Sri
Lanka, Afghanistan, China, Iran, Nepal and Bhutan.
Conditions of number of days stay in India: No doubt, Foreign Exchange Management Act, 1999 definition has also incorporated an
NRI's stay of 182 days or less during a year in India, but simply speaking if a person of Indian
origin has gone out of India for settlement he is to be treated as an NRI irrespective of number
of days he has stayed in India.
Stay in India during visits:
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The Act also lays down that such a person will continue to be an NRI during his visit/stay in
India provided he has not returned to India for taking up employment or carrying on business
or vacation or any other circumstances as would indicate his intention to stay in India for an
uncertain period. Accordingly, an NRI settled abroad, irrespective of the number of days stay
in India will continue to be an NRI during his visit to India provided he has not returned to
India for permanent settlement.
"Overseas Corporate Body" (OCB) 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.
2(xi) " Overseas Corporate Body (OCB)" means a company, partnership firm, society and
other corporate body owned directly or indirectly to the extent of at least sixty per cent by NonResident Indians and includes overseas trust in which not less than sixty per cent beneficial
interest is held by Nonresident Indians directly or indirectly but irrevocably.
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Permitted Credits
Proceeds of personal cheques drawn by the account holder on his foreign currency account
and of travelers cheques, bank drafts payable in any permitted currency including instruments
expressed in Indian rupees for which reimbursement will be received in foreign currency,
deposited by the account holder in person during his temporary visit to India provided the
authorized dealer/bank is satisfied that the account holder is still resident outside India, the
travelers cheques/drafts are standing/endorsed in the name of the account holder and in the
case of travelers cheques, and they were issued outside India.
Proceeds of foreign currency/bank notes tendered by account holder during his temporary
visit to India, provided
(i) the amount was declared on a Currency Declaration Form (CDF), where applicable, and
(ii) the notes are tendered to the authorized dealer in person by the account holder himself and
the authorized dealer is satisfied that account holder is a person resident outside India.
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Permitted Debits
Local disbursements
Transfer to NRE/FCNR accounts of the account holder or any other person eligible to maintain
such account.
Any other transaction if covered under general or special permission granted by the Reserve
Bank.
For
making
iii)
For
acquisition
in
real
investment
in
direct
of
flat/house
in
estate
India
India
for
on
his
business).
non-repatriation
own
residential
basis.
use.
In January 2007, the RBI imposed a restriction on loans against deposits and securities for NRIs
to a maximum of up to Rs. 20 lakh
To third parties
The loan should be utilized for personal purposes or for carrying on business activities (other
than agricultural/plantation activities/real estate business). The loan should not be utilized for
re-lending.
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in the NRE accounts and also agree to remittance of funds from India if necessary, for
liquidation of debts.
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Types of Accounts
NRO accounts can be opened as current, savings, recurring or fixed deposit accounts. The RBI
determines the rate of interest on these accounts and issues guidelines for opening, operating and
maintaining them.
Permissible Credits/Debits Credits Remittances from outside India through normal banking channels received in freely
convertible foreign currency.
Any freely convertible foreign currency can be deposited into the account during the account
holder's visit to India. Foreign currency exceeding USD 5000/- or its equivalent in the form of
cash has to be supported by a Currency Declaration Form. Rupee funds must be supported by
an Encashment Certificate, if they are funds brought from outside India.
Current income earned in India, such as rent, dividend, pension or interest. Even proceeds
from sale of assets including immovable property acquired out of rupee or foreign currency
funds or through inheritance.
Debits -
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All payments towards expenses and investments in India
Payment outside India of current income like rent, dividend, pension, interest etc. in India of
the account holder.
Repatriation up to USD One million, per calendar year, for all bonafide purposes with the
approval of the authorised dealer.
Remittance of Assets
NRIs and PIO may remit upto USD One million per calendar year, out of balances held in the
NRO account which could be acquired from the sale proceeds of assets acquired in India out of
rupee or foreign currency funds or by way of inheritance from a resident Indian, provided:
1.Assets acquired in India out of rupee/foreign currency funds
(a) Immovable property: NRIs and PIO may remit sale proceeds of immovable property
purchased by them when they were resident or out of Rupee funds as NRI or PIO.
(b) Other financial assets: There is no lock-in period for remittance of sale proceeds of
other financial assets
2.Assets acquired by way of inheritance:
Sale proceeds of assets acquired through inheritance can be remitted. No lock-in period
applies here if the authorised dealer is satisfied that the proceeds are from inherited
property.
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Restrictions
The above facility of repatriation from sale of immovable property is not extended to citizens of
Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan. Remittance of
sale proceeds from other financial assets is not extended to citizens of Pakistan, Bangladesh,
Nepal and Bhutan.
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Tax @ 30% will be deducted at source on all interest income in NRO accounts.
On permanent return to India, income on all investments out of foreign exchange funds would
be eligible for a flat tax rate of 20% (excluding surcharge) till maturity of the investments.
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BANKING SERVICES
NRI banking services including deposits, savings accounts, finance like home loans, personal
loans etc. Various banks like ICICI Bank, Citibank, HDFC Bank and many other nationalized
and private banks that hold authorized dealer's licenses from the Reserve Bank of India (RBI)
provide
remittances,
savings,
earnings,
investments
and
repatriation
services.
Besides the major commercial banks, certain cooperative and regional rural banks (RRB's) have
also been specifically permitted to maintain NRI accounts. This would increase NRI remittances
in Bihar, Kerala, U.P. and Gujarat where a large chunk of the rural population have settled
abroad.
The banks also offer finance services to the NRI's that cover home loans for buying new
residential property, housing renovation loans for constructing or modifying on the existing
properties, personal loans and other loan products.
Another FDI (Foreign Direct Investment) magnet has been the various money transfer services
provided. Various banks provide quick, convenient and economical fund remit to India. These
include:
Online remittance services
Remittance of funds to partner exchange houses in India
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Telegraphic or wire transfer
Fund transfer through cheques/ DD's and Travelers' cheques.
Many banks also offer Demat account services to the NRI's that enable NRI's online stock
investment and share trading services. Special NRI credit cards acceptable globally are available
with various banks. These specialized services and banking accounts have drawn enormous NRI
funds to India.
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Additionally, at the time of booking the FCNR a Forward Agreement is also drawn to exchange
the maturity amount of USD to Rupees at a given rate (Forward Rate).
Rupee plus plan advantage: - on an average the returns are significantly higher compared to
putting your money in NRE FD as per the prevailing market rates. Returns in rupee terms are
assured once the deal is booked irrespective of the future movements in currency markets.
The following banking facilities are available to NRIs, as per the current
RBI/FEMA guidelines.
Particulars
Foreign Currency
Non-Resident
(Non-Resident)
(External) Rupee
Account (Banks)
Account
Scheme(FCNR(B)
Scheme(NRE
Account)
Account)
NRIs/PIOs
NRIs/PIOs
account
(Non-Resident
Ordinary Rupee
Account Scheme(NRO
Account)
Any person resident
outside India (other
than a person resident
in Nepal and Bhutan)
Joint account
NRIs
or more NRIs
with residents
Nomination
Permitted
Permitted
Permitted
Currency in which
Pound Sterling, US
Indian Rupees
Indian Rupees
account
is denominated
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Repatriability
Repatriable
Repatriable
Non-repatriable*
Type of Account
Savings, Current,
Savings, Current,
Recurring, Fixed
Recurring, Fixed
Deposit
Deposit
Rate of Interest
Rate of interest on
domestic savings
domestic savings
except in case of
applicable to NRO
LIBOR rates
banks subject to
Tax Aspects
RBI
source.
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MONEY TRANSFER
Money can be transferred either through on line or drafts or telegraphically or by wire transfer or
Cheques. E-Transfer is completely online, paperless money transfer service which enables the
customer to send money directly from one bank account in foreign country to India. Drafts in
Indian rupees can be purchased from exchange companies of one country and mailed to the
branch of another country where the customer has the account. Telegraphic or wire transfers can
be made through branch to branch. Cheques can be deposited for credit of the customers
accounts and the Cheques will be collected and credited to their accounts.
Western Union Money Transfer
Western Union is a global leader in money transfer services, with a history of pioneering dating
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back more than 150 years. Non-resident Indians can now transfer their funds to India through the
Money Transfer Service offered by Western Union. This service is currently available for inward
remittances
in
India.
"Credits to NRE/FCNR accounts are not permitted to be routed through Money Transfer Service
Scheme (MTSS)"
SENDWISE:A rupee demand draft delivered to the recipients doorstep within three to four working days and
can be encashed at any nationalized bank in India.
MONEYGRAM Send money online today:You can send money around the world online to over 84,000 moneygram agent locations, in
more than 170 countries. Not only is sending money with moneygram safe and convenient,
youll find the same day services to be one fastest way to send your money online-usually
arriving within minutes. Send money online or at a moneygram agent location near you.
Moneygram is a global leader in international money transfers and the largest processor of
money orders in the U.S. We help people and business by providing affordable, reliable and
convenient payment services.
ICICI Bank NRI Money Transfer:ICICI Bank, the leading bank in India offering financial services to the NRI community through
NRI saving account, NRE Accounts, Fixed Deposit, FCNR deposits, and the quickest way to
send money online to India.
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The Government of India has adopted a liberal policy, with respect to investment by NRIs and
OCBs in India, such investment are allowed, both, through the RBI route and also through the
Government route, i.e., through the Foreign Investment Promotion Board (FIPB) NRIs and
OCBs are permitted to invest up to 100% equity in real estate development activity and civil
aviation sectors. Investment, made by the NRIs and OCBs, are fully repatriable, except in the
case of real estate, which has a 3 year lock-in period on original investment and, 16% cap on
dividend repatriation.
Various investment opportunities in India available to NRIs: If one is NRI, the following investment opportunities are open to you:
Maintenance of bank accounts in India.
Investment in securities/shares and deposits of Indian firms/companies.
Investment in mutual funds in India.
Investment Policy for Non-resident Indians (NRIs):Recognizing the investment potential of the Non-resident Indians, a number of steps are being
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taken by the government on an ongoing basis to attract from them in Indian companies. Some of
the investment schemes presently available to Non-resident Indians (NRIs) include the facility to
invest upto 100 percent equity with full benefits of repatriation of capital invested and income
accruing thereon in high priority industries mentioned in the Annexure-III to the industrial policy
1991, 100 percent export oriented units, sick units under revival, housing and real estate
development companies, etc,. NRIs/PIOs/OCBs are also permitted to make portfolio investments
through secondary markets. In terms of the relaxations announced in 1998-99, investment limits
for an individual NRI has been revised upwards from 1% to 5%, aggregate portfolio investment
limits by all NRIs increased from 55 to 10% of the issued and paid-up capital of the company.
The aggregate investment limit would be separate and exclusive of FII portfolio investment
limits.
For NRI Investment:In order to help the tax-payers to plan their Income-tax affairs well in advance and to avoid long
drawn and expensive litigation, a scheme of Advance Rulings has been introduced under the
Income-Tax Act, 1961. Authority for advance rulings has been constituted. The tax-payer can
obtain a binding ruling from the Authority on issues which could arise in the determination of his
tax liability. A non-resident or certain categories of resident can obtain binding rulings from the
Authority on any question of law or fact arising out of any transaction/proposed transactions
which are relevant for the determination of this tax liability.
Portfolio Investment
NRIs/OCBs are permitted to make portfolio investment in shares/debentures (convertible and
non-convertible) of Indian companies, with or without repatriation benefit provided the purchase
is made through a stock exchange and also through designated branch of an authorized dealer.
NRIs/OCBs are required to designate only one branch authorized by Reserve Bank for this
purpose.
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NRIs Interest:NRIs invested only 5% of their investible assets in India with the balance being parked overseas.
A major reason for this was that the Indian banking system was not a very preferred and trusted
mode of investment for the NRI. The customer was looking for convenience, speed, high yield
on investment with manageable risks, reasonable costs and quality services A face of India he
could associate with. Competition was not only from India based banks, but also from local
banks based overseas; conventional and non conventional routes of money transfer.
Facilitation Agencies
The main regulatory and facilitation agencies involved in the matters related to NRIs/OCBs
investment are Reserve Bank of India (RBI), Securities and Exchange Board of India (SWBI),
Authority for Advance Rulings (AAR), Secretariat for Industrial Assistance (SIA), Ministry of
Commerce and Industry; and Office of the Chief Commissioner (Investments & NRIs).
RBI Forms
NRIs/OCBs/PIOs do not have to seek specific permission for approved activities covered under
General permission schemes. The activities relating to NRIs/OCBs/PIOs not covered under
those schemes either require declaration to RBI or permission from RBI. The activities requiring
Declaration/Permission along with corresponding forms are as under;
TS 1
FNC 1
IPI
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For all Indian citizens who are liable to pay tax under the Income Tax Act, 1961, or are required
to enter into financial transactions in India, it is mandatory to have a Permanent Account
Number.
The Permanent Account Number (PAN) is a combination of 10 alphanumeric numbers issued by
the Income Tax Department. The Department has entrusted UTI Investor Services Ltd. (UTIISL)
with the task of managing IT PAN Service Centers wherever the IT department has an office in
the country. The National Securities Depository Limited (NSDL) has also been engaged to allot
PAN cards from TIN Facilitation centers.
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A demat account facilitates buying and selling shares, precluding cumbersome paperwork and
meaningless delays.
Advantages of a Demat Account It is a safe, secure and convenient mode of transacting in shares.
Minimizes brokerage charges
Ensures immediate liquidity
Removes uncertainty on ownership title of securities
Allows quick allotment of public issues
Enables smooth process in pledging shares
Avoids delays due to wrong/incorrect signatures, post, and misplacement of certificates
Prevents risks like forgery and counterfeit, theft or damage to documents
Saves on stamp duty, paperwork on transfer deeds
Gives immediate benefits from bonus shares and stock splits
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No opening balance is required for a demat account.
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CHAPTER-4
Analysis and Interpretation
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the proceeds to India. Since his daughter might go back to US for higher education in future he
will require money (US Dollars) at that point of time. Therefore, in his case, the liquidation and
then allocation of assets must be based on his needs in India as well as in the US.
Keeping this in mind we proposed to conduct his entire financial planning exercise in two
phases. The first phase involved understanding of his needs in India and the US and accordingly
liquidating his investments. The second phase involved, investing the proceeds in India.
Liquidation process:
We first started with liquidation of his investments in US, and for this, demarcating his needs in
India and US became the starting point for us. Since the client has no prior investments in India,
it gave us a good opportunity to define a well-diversified portfolio for him.
The next step was to decide the quantum of investment to be liquidated based on his needs. In
US, he has to continue with some of his investments for his daughter's future education. We
found that around 10% of the client's total wealth will be sufficient for this purpose and rest he
can liquidate. Thus, we advised him to liquidate 90% of his total investments in US.
The next step was to transfer the proceeds to India. Normally, people who have foreign currency
(in this case US Dollar) get apprehensive about the exchange rate at which their proceeds are to
be transferred. In this particular case, since the client is already settled in India, we advised him
not to pay much heed to the exchange rate and instead start transferring the funds.
NRI Banking
The fact that the client is financially very sound and in a position to take some risk, we
recommended that he invest upto 35% of the surplus in well-managed diversified equity funds in
a disciplined manner based on his needs and objectives. The portfolio consisted of no more than
six schemes.
Equities as an asset class are best equipped to generate high returns over longer time frames (3-5
years). Thus, his investment in equities should be well equipped to cater his future needs such as
his daughter's marriage, his retirement planning or any other need as and when required.
Another 10% of the surplus cash inflows could be invested in debt funds (short-term debt funds,
as at present interest rates are on the rise). Inclusion of debt funds in the portfolio will ensure that
the portfolio becomes well diversified across asset classes.
The balance (5%) could be maintained in liquid assets for any immediate requirement or for
contingency. Rajeev was also advised to take up a term insurance policy for himself. This is a
pure risk cover plan that enables the individual to opt for a high insurance cover at relatively
lower premiums.
It goes without saying that our recommendation to Rajeev (although very critical) was just a
starting point. First and foremost, it needs to be executed (investing in mutual funds, buying
property) and then the plan needs to be monitored regularly. This is necessary as over time,
Rajeev's risk profile will change, as he gets older, he may not be comfortable with a higher
allocation to equity, so a portion of his money will have to be shifted to lower risk assets. Also
the performance of the mutual fund schemes will have to be monitored. Given the nature of the
task, it is best for Rajeev that he engages the services of a professional and competent financial
planner who can actively monitor his financial plan.
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A. Deposits are value dated. The date will be the date on which the funds are received by
Barclays (India) in its Nostro accounts.
Q. How much money can an NRI remit abroad annually from his NRO accounts?
A. An NRI can remit up to USD 1 million (or equivalent) per calendar year for any bonafide
purpose subject to payment of tax and furnishing the required documents.
Q. Can an NRI repatriate sale proceeds of his property purchased by him by remittance from
abroad?
A. Yes. However the amount repatriated should not exceed the amount paid for acquisition.
Remittances exceeding US $ 1,000,000 (US Dollar One million only) in any financial year
requires prior permission of the Reserve Bank.
Q. What is the limit on the international ATM-cum-Debit card for NRI customers?
A. The International ATM-cum-Debit card offers Rs 50,000 of cash withdrawal per day and
transactions worth Rs 50,000 at merchant establishments.
Q. What are the charges applicable for debit card?
A. There are no withdrawal charges for cash withdrawn from any VISA ATM network across the
world. For purchases and ATM transaction(s) outside India there is a 2.5% currency conversion
charge, at all VISA enabled POS and ATM machines. Service Tax (currently 12.36%) on these
charges will be levied. For details of charges on Domestic debit cards, kindly refer the schedule
of charges for Consumer banking.
Q. Can I repatriate money out of balances held in my NRO accounts?
A. Interest earnings can be repatriated. In addition to this, remittance/s up to USD 1 million per
calendar year from balances in NRO accounts subject to payment of applicable taxes is allowed.
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CHAPTER-5
Conclusion and Recommendation
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CONCLUSION
NRI Banking today stands as one of the most profitable business for banks. With India having
one of the largest NRI populations and a very prosperous one too, NRI banking is one hot
business no bank can afford to ignore today. India needs foreign exchange reserves for its
developing economy. Realizing this, banks are shaping up their strategies in order to attract this
NRI money. Further with India pushing for Capital Account Convertibility, and the success of
Pravasi Bharatiya Diwas, prospects for NRI banking has never been so good than today.
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Bibliography
Books/Journal
Nri Banking
Articles in Newspapers
Website
https://en.wikipedia.org/wiki/Non-resident_Indian_and_person_of_Indian_origin
www.icici.com
www.scribd.com/doc/45634694/Nri-Banking-Main
Libraries referred
College library
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