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RBI relaxes bank account and foreign exchange rules for NRIs & PIOs

The Reserve Bank of India has announced some changes to foreign exchange and bank account norms for Non Resident Indians (NRIs).

This has resulted in further liberalization of the Foreign Exchange Management Act (FEMA).

Following are the changes.


Holding joint account with resident Indians

NRIs will now be allowed to hold joint accounts with resident Indians – something that was not allowed so far.

(Want to know what NRI, RNOR, Resident, PIO, etc. mean? Read “Definition of Residential Statuses: Resident, RNOR, NRI, PIO“)


Resident accounts

Resident Indians can have a non-resident close relative as a joint holder in their resident accounts. There is a caveats, though: The joint holding will be on a “former or survivor” basis, which means the non-resident joint holder would not be able to operate the account till the resident Indian holder is living.


NRE / FCNR Accounts

NRIs can now open NRE or FCNR accounts with a resident close relative. In this case, the resident Indian holder can operate the account as a power of attorney holder.

This would prove to be very useful for parents whose children are living abroad and are NRIs.

(To know more about various NRI account types, please read “Non-Resident External (NRE) & Non-Resident Ordinary (NRO) Accounts for NRIs“)


EEFC / RFC Accounts

Resident Indians can now have a resident close relatives as a joint holder in their EEFC or RFC accounts. This will also be on a “former or survivor” basis.


Increasing the limit for gifts

Currently, securities worth $25,000 could be gifted by residents to NRIs every year. Now, this limit has been doubled to $50,000 per year.


Repayment of home loans

Resident Indians can now repay housing loans (in Rupees) for their NRI or PIO close relatives. This flexibility has been extended only to home loans and not to any other type of loan.


Loans to NRIs and PIOs by resident Indians

Resident Indians can lend upto $200,000 (USD 2 Lakhs) in a year to their NRI / PIO close relatives. Following are the conditions that need to be met:

  • The loan can be for personal or business use, but not for agriculture, real estate, chit funds or re-lending
  • There should be no interest charged
  • The minimum maturity of the loan should be 1 year
  • The money should not be remitted outside India by the NRI / PIO


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