NRI BANKING
Project On INNOVATIVE BANKING SERVICES PROVIDED TO NRI
BACHELOR OF BUSINESS MANAGEMENT (INTERNATIONAL BUSINESS)
SEMESTER VI 2012-2013
Submitted By SHUBHAM SHUKLA ROLL NO- 10312 MARATHWADA MITRA MANDAL COLLEGE OF COMMERCE UNIVERSITY OF PUNE
1
NRI BANKING
TOPIC NAME
PAGE NO
Unit No.
01.
02.
05 06 07 08
INTRODUCTION ON NRI BANKING:
Who is an NRI?
10
Key benefits
11
Types of accounts
Opening of NRI A/c
12 15
DEPOSITORY’S SCHME FOR NRI’S: -
NRE A/c Types of Accounts FCNR A/c NRO A/c
25
Tax Benefits for NRI’s
35
03.
04
EXECUTIVE SUMMARY OBJECTIVES OF THE STUDY SCOPE OF STUDY RESEARCH DESIGN REVIEW OF LITRETURE LIMITATION OF STUDY
28 30
SERVICES OFFERED BY VARIOUS BANK TO NRI’S:
36
Banking Services
Services offered by ICICI Bank
Facility available as per RBI/FEMA
2
37
guidelines
38
NRI BANKING
TOPIC NAME
PAGE NO
Unit No.
01.
02.
05 06 07 08
INTRODUCTION ON NRI BANKING:
Who is an NRI?
10
Key benefits
11
Types of accounts
Opening of NRI A/c
12 15
DEPOSITORY’S SCHME FOR NRI’S: -
NRE A/c Types of Accounts FCNR A/c NRO A/c
25
Tax Benefits for NRI’s
35
03.
04
EXECUTIVE SUMMARY OBJECTIVES OF THE STUDY SCOPE OF STUDY RESEARCH DESIGN REVIEW OF LITRETURE LIMITATION OF STUDY
28 30
SERVICES OFFERED BY VARIOUS BANK TO NRI’S:
36
Banking Services
Services offered by ICICI Bank
Facility available as per RBI/FEMA
2
37
guidelines
38
NRI BANKING
04.
INNOVATIVE SERVICES
37 37
05.
06.
E-Statement Mobile Banking Internet Banking Money Transfer Exchange Rate Calculator NRI edge Account Innovation in Banking Branches
38 40 44 46
NRI INVESTMENTS:50
Investment opportunities in India for NRI
RBI forms
52
PAN CARD FOR NRIs:-
53
Applying for pan card, necessity for pan card, charges of pan card
07.
Demat a/c
55
QUESTIONNAIRE
58
DATA INTERPRETATION
60
FINDING AND SUGGESTION
CONCLUSION
BIBLIOGRAPHY
75 76 77
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NRI BANKING
ACKNOWLEDGEMENT First and Foremost I thank the ALMIGHTY for the Inspiration and strength to complete this project report successfully.
I would firstly like to thanks Prof. UDAY KIRAN Sir who has provided me the kind opportunity to do this project and to finish it in a successful manner. My heartily thanks to Mrs. UJJAWALA JOSHI & KALPANA VAIDYA the coordinator of my BBA/BBM and other faculties, who have right from the beginning encouraged me to do the project well. On a personal note, I wish to thank my family members and friends for their constant support in helping me accomplish my mission
4
NRI BANKING
EXECUTIVE SUMMARY: 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 NRI‘s 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 NRI, s 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. Banks should also extend their services by providing ATM‘s 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. Study Area of my project : Brief study of NRI Account How to Operate and How
to Open an account, DEMAT account, Interest rate, RBI Policy, Innovation in banking system, Mobile banking, internet banking, Bank facilities, etc.
5
NRI BANKING
OBJECTIVE OF THE STUDY
To get an overview of NRI BANKING SERVICES
To analyze the growth of NRI banking services
To study the innovative concepts emerging in the banking industry for NRI‘s
To observe the facility provided to NRI by Indian banks
To analyze the response of the NRI given to the computerization & new invention in an Indian banks.
SCOPE OF STUDY:The scope of the study is to extend the knowledge about the NRI Banking services provided by banks. To know about process of Banking system and service and exact know all process A/C Open, Facilities, Interest Rate, etc
6
NRI BANKING
RESEARCH DESIGN: - In order to conduct the research an appropriate research design became necessary. In this direction of secondary data were attempted to be collected. The methodology for collecting data with reference to the secondary data was taken from the different published articles, books, Projects, journals, and the relevant websites. My Questionnaires is cover whole innovative banking services to NRI. Find out data interpretation of all questionnaires. Analysis of this survey got result of Innovation required at may many places in banking system. My sampling is 50 people for survey. After survey I got 50 review of my questionnaire from this review with help of Uday sir and miss. Kalpana, Madam we analysis data interpretation work and give final reveal of my project result.
Review of literature: Study about Innovative banking services to NRI, To Know about new Innovation in baking service for NRI. Studies type account of NRI. And RBI policy, Tax exemption, etc. I use my Use Secondary data and make Questionnaires for NRI; my sampling is 50 for survey after survey make data interpretation and gives finding and suggestion. My result is Innovation required at various place of banking system and work for satisfaction to NRI.
WHY:- To get an overview of NRI BANKING SERVICES
When: - this is study of 2 month project.
WHAT: - TO Know innovation about banking service for NRI
WHERE: - With help of secondary data and questionnaire and survey.
7
NRI BANKING
Limitation of the study:
For Survey NRI is not available easily.
Data interpretation part in some problem came.
Sometime secondary data is miss match from my topic.
Bank people are not giving proper suggestion.
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NRI BANKING
1. INTRODUCTION
NRI Banking – An Introduction:As per RBI guidelines, the residential status of an Indian changes to that of the Non-Resident, in the event of his stay abroad being more than 183 days. This period of 183 days is not applicable in certain cases like going overseas for employment or business. It is mandatory to inform the bank of your change of your residential status. With a view to attract the savings and other remittance into India through banking channels from the person of Indian Nationality / Origin who are residing abroad and bolster the balance of payment position, the Government of India introduced in 1970 Non-Resident(External) Account Rules which are governed by the Exchange Control Regulations. The funds held in Non-Resident (External) Accounts (NRE Accounts) qualify for certain benefits like exemptions from taxes in India, free repatriation facilities, etc. NRI banking facilities are available to NRIs and PIOs.
9
NRI BANKING
WHO IS A NON – RESIDENT INDIAN [NRI]?
A Non Resident Indian (NRI) as per FEMA 1999 is an Indian citizen or Foreign National of Indian Origin resident outside India for purposes of employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period. An individual will also be considered NRI if his stay in India is less than 182 days during the preceding financial year. To meet the specific needs of non-resident Indians related to their remittances, savings, earnings, investments and repatriation, the Government of India introduced in 1970 Non-Resident (External) Account Rules which are governed by the Exchange Control Regulations. "Non Resident Indian" (NRI) means an Indian citizen or a foreign citizen of Indian
origin (excluding citizens of Bangladesh and Pakistan) residing outside India. Students studying abroad are also treated as NRIs. Indian citizen who stays abroad for an indefinite period on employment, business or on any vocation is a Non-Resident. Diplomats posted abroad, persons posted in UN Organizations and Officials deputed by PSU on temporary assignments are also treated as Non-residents.
10
NRI BANKING
KEY BENEFITS NRI-Banking follows a modular structure. The various modules render our NRI Banking solution offerings (which are stated below) in a seamlessly integrated
fashion. The Masters module permits maximum parameterization to be done, enabling the end user to make all changes with regard to Interest Rates or with regard to any changes
as
Maintains
per
directives
from
Head
Office/RBI.
Bank, Branch and holiday details
Facilitates maintenance of Instrument, Interest rate and overdue interest rate details Masters. Inventory, Currency, Country, Exchange rate and return reason details are also maintained Favors opening, authorization and freezing of Accounts Transaction entry and
passing
is
made
easy
Provisions availed for issuing, passing and stop payment of cheques. Supports Account closure, Preclosure, Renewal & overdue renewal of Deposits. Aids
Day
Begin,
Day
End
&
Month
End
Processing
Processes Quarterly, and transfer to Inoperative & Half Yearly - SB Interest Calculation. Hastens Deposit Receipt Printing, Changing to RFC, Interest Payment & Overdue Process. Supports Acceptance and Execution of standing instruction.
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NRI BANKING
Types of accounts 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 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. Various accounts: NRE
FCNR-B A/c - foreign currency non residential account.
NRO
A/c - non residential (external) rupee account.
A/c - nonresident ordinary account.
RFC A/c - resident foreign currency account.
All NRIs can open such accounts, with the exception of individuals residing in Pakistan and Bangladesh, who require special permission from the RBI. Joint accounts of two or more non-residents and nomination facility are permitted. While the FCNR (B) is a term deposit only, the NRE and NRO accounts can be operated as either savings, current, recurring or fixed deposit accounts. As for interest rates, FCNR (B) and NRE are subject to a cap, and should not exceed the LIBOR/SWAP rates. In the case of NRO accounts, rates are determined by the banks. The interest rates, currently at 3.5% apply to a period of 1 to 3 years.
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NRI BANKING
The total NRE/ FCNR deposits during 2006-2007, as per RBI statistics, are USD 37,751 million and are expected to grow with regional rural banks also mopping up funds. Banks are expected to offer lucrative interest rates to bolster NRI funds. Banks offer two types of accounts to NRIs, based on their reparability. 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. Non-Resident (External) Rupee (NRE) Accounts
Both Principal and Interest can be repatriated/transferred out of India
Savings rate on NRE accounts is at par with savings rates in resident accounts
Term deposits can be made for 1 to 3 years.
The interest rates on (NRE) Term deposits cannot be higher than LIBOR/SWAP rates as on the last working day of the previous month, for US dollar of corresponding maturity plus 50 basis points.
The interest rates on three year deposits also apply in case the maturity period exceeds three years. The change in interest rate also applies to NRE deposits renewed after their present maturity period.
13
NRI BANKING
FCNR (B) Accounts
As in NRE accounts, both principal and interest are repatriable.
Presently, deposits can be made in 6 specific foreign currencies (US Dollar, Pound Sterling, EURO, Japanese Yen, Australian Dollar and Canadian Dollar).
Interest rate- Fixed or floating within the limits of LIBOR/SWAP rates for the respective currency/corresponding term minus 25 basis points (except Japanese Yen).
The term of deposits can range between 1 to5 years.
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.
14
NRI BANKING
Resident
Foreign
Currency
(RFC)
Account
NRIs and PIOs returning to India can maintain an RFC account with an authorized bank in India to transfer funds from their NRE/FCNR (B) accounts. Proceeds of assets held outside India before their return to India can be credited to the RFC account. These funds are free from all restrictions as to their utilization or in investment in any form outside India. 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 an NRE account. Non Resident Ordinary (NRO) Account
When a resident becomes an NRI, his existing savings account is designated as a Non-resident Rupee (NRO) account.
The NRO accounts could be maintained in the nature of current, saving, recurring or term 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 not repatriable or transferred to NRE accounts without the prior approval of the RBI.
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NRI BANKING
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
OPENING OF NRI ACCOUNT HOW TO OPEN NRI ACCOUNTS WITH A BRANCH IN INDIA
To open an NRE account please complete the account opening form and mail it to the branch of your choice along with ;
Passport copy
Visa/residence permit
2 photographs
initial money remittance
Your signature may be verified by anyone of the following;
Indian Embassy/consulate
Any person known to the Bank
Notary
public
Any of our offices abroad
You can open NRE
Saving Bank a/c / Current Accounts
Fixed Deposits in Indian Rupees
Fixed Deposits in Foreign Currency
NRO
accounts (Rupee accounts for crediting income in India )
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NRI BANKING
You can authorize a resident to operate your account through a Power of Attorney or Letter of Authority Nomination Facility available (Nominee can be a resident Indian also)
Procedures & Benefits: Non-Resident
accounts can be opened along with your remittances through
banking channel.
Photograph shall be enclosed with the opening form.
There is no ceiling on the amounts remitted for your credit in Non-Resident account.
When the NRI depositor returns to India, the NRE account will be automatically treated as Resident account. However NRE term deposit will continue to earn same rate till maturity even after such conversion.
NRE
accounts earn more interest than domestic deposits.
Nomination
facilities are available for registration in favor of a non resident or
resident.
Loans against deposits are allowed for purposes other than investment up to 90% of the deposit.
The income from deposit is free from Indian Income Tax.
It is also free from Gift tax for one time gifting.
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NRI BANKING
Documents Required:In case account opened in person:
Indian passport with overseas resident address or work permit (i.e. Green Card as residence permit for USA, H1 Visa as work permit for USA or Hongkong ID card for residence of Hongkong) Separate proof of Non Resident status if the passport holds Indian address and resident Visa permit is not included in passport. Photograph of individual account holder For persons employed with foreign shipping company
Initial work contract
Last wage slip
For contract employees
Last work contract
Letter from local agent confirming next date of joining the foreign vessel (not more than six months from date of last return to India)
Principal's overseas address or current work contract
In case of documents sent by mail
All the relevant above mentioned documents / signatures to be attested by any one of the following:
Indian embassy overseas notary
Local bank
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NRI BANKING
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
19
NRI BANKING
Opening of JOINT ACCOUNTS:Type of account
Joint Account with
Joint Account with
Resident Indians
Non-Resident Indians
NRO
Yes
Yes
NRE
No
Yes
FCNR
No
Yes
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NRI BANKING
2. DEPOSITORY’S SCHEME FOR
Non-Resident (External) Account - NRE Account Eligibility -
Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) can open and maintain
NRE accounts
with authorized dealers and with banks (including co-
operative banks) authorized by the Reserve Bank of India (RBI) to maintain such accounts. The account has to be opened by the Non Resident account holder himself and not by the holder of the power of attorney in India. Opening NRE accounts in the names of individuals/entities of Bangladesh/Pakistan nationality/ownership requires approval of RBI Types of Accounts - Savings, Current, Recurring or Fixed Deposit accounts. Debits &
Credits:
Payments for local expenses and investments are allowed freely. Credits to an account, of funds emanating from a local source would be permissible only if the funds are of a repatriable nature.
21
NRI BANKING
Permitted Credits
Proceeds of remittances to India can be in any permitted currency.
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, (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.
Permitted Debits
Remittances outside India
Transfer to NRE/FCNR accounts of the account holder or any other person eligible to maintain such account.
Investment in shares/securities/commercial paper of an Indian company or for purchase of immovable property in India within prescribed regulations.
Any other transaction if covered under general or special permission granted by the Reserve Bank.
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NRI BANKING
Rate of Interest - as per the directives of the Reserve Bank of India.
Loans against Security of Funds held in the Account
To the account holder
i) For personal purposes or for carrying on business activities (except agricultural/plantation ii)
For
making
activities/investment
direct
investment
in
in
India
real on
estate
business).
non-repatriation
basis.
iii) For acquisition of flat/house in India for his own residential 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.
Loans outside India
Authorized dealers may allow their overseas branches/correspondents to grant fund based and/or non-fund based facilities to Non Resident depositors against the security of funds held in the NRE accounts and also agree to remittance of funds from India if necessary, for liquidation of debts.
Change of Resident Status of Account Holder
NRE Accounts should be re designated as resident account or the funds held in these accounts may be transferred to the Resident Foreign Currency (RFC) Accounts (if the account holder is eligible for maintaining RFC Account) at the option of the account holder immediately upon the return of the account holder to
23
NRI BANKING
India (except where the account holder is on a short visit to India). Repatriation of funds to Non Resident Nominee can be permitted by the authorized dealer
or bank in the case of an account holder who is deceased. Foreign Currency (Non-Resident Indians) FCNR (B) Account Eligibility to Open and Maintain FCNR A/c
With the exception of persons of Indian origin from Bangladesh and Pakistan, all NRIs and PIOs are eligible to maintain an FCNR account with an authorised bank in India.
Accounts may be opened with funds remitted from outside, existing NRE/ FCNR accounts, etc.
Remittances should be in the designated currency.
Conversion to currency other than the designated currency also permitted at the risk and cost of the remitter.
Features of FCNR Account
The account can be opened with funds remitted from abroad, or transferred from an existing NRE/FCNR account.
FCNR accounts can be opened with designated currencies, which are: GBP, USD, Deutsche Mark, Japanese Yen and the Euro.
Conversion to another designated currency is permitted at a cost to the account holder.
Only term deposits can be maintained in FCNR accounts, in a time range of 6 months to 3 years.
As per RBI guidelines, banks are free to offer interest on FCNR deposits below LIBOR rates, less 25 basis points for deposits between 6 months to one year, 24
NRI BANKING
and LIBOR rates plus 50 basis points for deposits over a year.
Banks are also free to decide on a fixed or a floating rate of interest on FCNR term deposits.
Interest rates are reviewed periodically and determined by directives from the Reserve Bank (Department of Banking Operations and Development).
The account holder can choose the periodicity of interest, from half-yearly to annual payments. The interest can be credited to a new FCNR (B) account or a NRE/NRO account.
For permissible debits and credits, the regulations for FCNR accounts are similar to the NRE accounts.
For conversion of currencies, from designated currency to rupees and vice versa, the day‘s rate of conversion will apply.
Funds from the FCNR account are allowed to move within the country at no extra cost to the account holder.
FCNR A/c after Change in Resident Status NRI
deposits such as the FCNR can continue till the maturity date at the
contracted rate of interest even after the account holder‘s resident status changes to resident Indian.
However, except for interest rates and reserve requirements of FCNR deposits, these accounts are treated as resident accounts effective from the account holder‘s date of return to India.
As for joint accounts, the same rules as those for NRE accounts apply to FCNR deposits too.
For repatriation of funds from the FCNR account, the same conditions as those for NRE accounts apply.
25
NRI BANKING
Non-Resident Ordinary Rupee (NRO) Account Eligibility
Any person or entity residing outside India is entitled to open a NRO account with an authorized dealer or an authorized bank for transactions conducted in Indian Rupees.
Individuals or entities of Bangladeshi or Pakistani nationality or ownership require approval from the RBI.
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. Joint Accounts with Residents/Non-residents
Joint accounts are permitted with resident and non-residents. Permissible Credits/Debits Credits
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. 26
NRI BANKING
Debits
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 authorized 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: 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 Assets acquired by way of inheritance:
Sale proceeds of assets acquired through inheritance can be remitted. No lock -in period applies here if the authorized dealer is satisfied that the proceeds are from inherited property. Remittance of assets out of NRO account by a person resident outside India other NRI/PIO
than
A foreign national who is not a citizen of Pakistan, Bangladesh, Nepal or Bhutan and who
27
NRI BANKING
has retired as an employee in India,
has inherited assets from a resident Indian, or
is a widow residing outside India and has inherited assets of her deceased husband who was a resident Indian can remit upto USD one million per calendar year on production of documentary evidence to support the acquisition by way of inheritance or legacy of assets to the authorised dealer.
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. Foreign Nationals of non-Indian origin on a visit to India
Foreign nationals of non-Indian origin are permitted to open a NRO account (current/savings) on their visit to India with funds remitted from outside India through normal banking channels or by foreign exchange brought to India. The balance in the NRO account is converted by the bank into foreign currency for payment to the account holder when he leaves India provided the account was maintained for less than six months. The account should not be credited with any local funds during the term, except for interest accrued on it. Grant of Loans/ Overdrafts by Authorised Dealers/ Bank to Account Holders and Third parties
Loans to NRI account holders and to third parties is granted in Indian Rupees by authorized dealers (banks) against the security of fixed deposits provided:
The loans are utilized only for meeting the borrower's personal requirements or for business and not for agricultural/plantation /real estate or relending activities
28
NRI BANKING
RBI regulations pertaining to margin and rate of interest will apply
All norms and considerations which apply to loans to trade and industry will apply to loans and facilities granted to third parties.
The authorized dealer/bank may allow an overdraft to the account holder subject to his commercial discretion and compliance with the interest rate directives. Change of Resident Status of Account holder - (a) From Resident to Non-resident
When a resident Indian leaves India for taking up employment or for carrying on business outside India, his existing account is designated as a Non-Resident (Ordinary) Account, except in the case of persons shifting to Bhutan and Nepal. For the latter, the resident accounts do not change to NRO accounts. (b) From Non-Resident
to Resident
NRO accounts may be re-designated as resident rupee accounts once the account holder returns to India for taking up employment, or for carrying on business or for any other purpose indicating his objective to stay in India for an uncertain period. Where the account holder is only on a temporary visit to India, the account continues to be treated as non-resident during the visit. Treatment of Loans/ Overdrafts in the Event of Change in the Resident Status of the Borrower
In case of a resident Indian who had availed of loan or overdraft facilities while resident in India and who subsequently becomes a NRI, the authorised dealer may at its discretion allow the loan facility to continue. In this case, payment of interest and repayment of loan may be made by inward remittance or out of bonafide 29
NRI BANKING
resources in India. Payment of
funds to Non-resident/Resident Nominee
The amount payable to a non-resident nominee from the NRO account of a deceased account holder is credited to the NRO account of the nominee. Facilities to a person going abroad for studies
Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities enjoyed by NRIs. All loans availed of by them as residents in India will continue to be extended as per FEMA
regulations.
International Credit Cards
Authorized dealers are allowed to issue International Credit Cards to NRIs and PIO, without the permission of the RBI. Such transactions can be made by inward remittance or out of balances held in the cardholder's FCNR/NRE/NRO Accounts. Income Tax
The remittances, after payment of tax are allowed to be made by the authorized dealers on production of a statement by the remitter and a Certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, and Government of India
30
NRI BANKING
TAX BENEFITS for NRIs
Interest on NRE & FCNR deposits is free of income tax.
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.
31
NRI BANKING
3. SERVICES OFFERED BY VARIOUS BANK TO NRI’S
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 incenses 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. 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
Fund transfer through cheques/ DD's and Travelers' cheques. 32
NRI BANKING
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. SERVICE OFFERED BY ICICI BANK:Rupee plus plan: - At ICICI Bank, we believe in providing you with the most
competitive returns on your hard earned money. Now you can earn even higher returns on your deposits by investing in Rupee plus plan. What does the Rupee plus plan offer you : - NRE-FD interest rates rate being
regulated by RBI is nearly same across banks? In Rupee plus plan we have devised a way to make your money work harder and smarter and earn higher returns in terms of NRI as compared to a NRE FD. Currencies: - you can be funds in any convertible currency, which will be
converted to USD (if not in USD already). Minimum Deposit: - USD 25,000 or equivalent. Tenor: - for 1 year only. How does the Rupee plus plan work? Instead of putting the money in NRE FD
directly, the money is put in USD denominated FCNR. This FCNR earns interest as per prevailing FCNR interest rates. 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).
33
NRI BANKING
The following banking facilities are available to NRIs, as per the current RBI/FEMA guidelines. Features of various Deposit Schemes available for Non-Resident Indians (NRIs) Particulars
Foreign Currency (NonNon-Resident (External) Non-Resident Ordinary Resident) Account (Banks) Rupee Account Scheme Rupee Account Scheme Scheme [FCNR (B) [NRE Account] [NRO Account] Account]
(1)
(2)
(3)
(4)
Who can open an account
NRIs (individuals / entities NRIs (individuals / Any person resident of Bangladesh / Pakistan entities of Bangladesh / outside India (other than a nationality / ownership Pakistan person resident in Nepal require prior approval of nationality/ownership and Bhutan). Individuals / RBI) require prior approval of entities of Bangladesh / RBI) Pakistan nationality / ownership as well as erstwhile Overseas 2 Corporate Bodies require prior approval of the Reserve Bank.
Joint account
In the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin; Resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on ‗former or survivor‘ basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder.
In the names of two or May be held jointly with more non-resident residents individuals provided all the account holders are persons of Indian nationality or origin; Resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on ‗former or survivor‘ basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder. 34
NRI BANKING
Nomination
Permitted
Permitted
Currency in Any permitted currency Indian Rupees which account is i.e. a foreign currency denominated which is freely convertible
Reparability
Repatriable
Type of Account Term Deposit only
Period for fixed For terms not less than 1 deposits year and not more than 5
Permitted
Indian Rupees
Repatriable
Not repatriable except for the following: i) current income ii) up to USD 1 (one) million per financial year (AprilMarch), for any bonafide purpose, out of the balances in the account, e.g., sale proceeds of assets in India acquired by way of purchase/ inheritance / legacy inclusive of assets acquired out of settlement subject to certain conditions.
Savings, Current, Recurring, Fixed Deposit
Savings, Current, Recurring, Fixed Deposit
At the discretion of the bank.
As applicable to resident accounts.
years. Rate of Interest Deposits of all maturities
Subject to cap as contracted effective from stipulated by the the close of business in Department of Banking India as on November 23, Operations and 2011, interest shall be paid Development, Reserve within the ceiling rate of Bank of India: LIBOR/SWAP rates plus 125 basis points for the Banks are free to respective determine the interest currency/corresponding rates of saving have and maturities (as against term deposits of maturity LIBOR/SWAP rates plus of one year and above. 100 basis points effective Interest rates offered by from close of business on banks on NRE deposits cannot be higher than
35
Banks are free to determine their interest rates on savings deposits under Ordinary Non-Resident (NRO) Accounts. However, interest rates offered by banks on NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
NRI BANKING
November 15, 2008). On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency/maturity plus 125 basis points. For floating rate deposits, the interest reset period shall be six months.
those offered by them on comparable domestic rupee deposits.
Operations by Operations in the account Operations in the Power of in terms of Power of account in terms of Attorney in Attorney are restricted to Power of Attorney are favour of a withdrawals for restricted to withdrawals resident by the permissible local payments for permissible local non-resident or remittance to the payments or remittance account holder
account holder himself through normal banking channels.
Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments in rupees, remittance of to the account holder current income to the himself through normal account holder outside banking channels. India or remittance to the account holder himself through normal banking channels. Remittance is subject to the ceiling of USD 1 (one) million per financial year.
Loans a. In India i) to the Permitted only up to Account holder Rs.100 lakhs
Permitted up to Rs.100 lakhs
i) to Third Parties
Permitted only up to Rs.100 lakhs
Permitted up to Rs.100 lakhs
Permitted (Provided no funds are remitted back to India and are used abroad only)
Permitted (Provided no funds are remitted back to India and are used abroad only)
b. Abroad i) to the Account holder
ii) to Third
Permitted
Permitted subject to the 3 extant rules
Permitted, subject to 4 conditions Not Permitted
Not Permitted 36
NRI BANKING
Parties
(Provided no funds are Permitted remitted back to India and (Provided no funds are are used abroad only) remitted back to India and are used abroad only)
c. Foreign Currency Loans in India
Permitted up to Rs.100 i) to the Account holder lakhs
Not Permitted
Not Permitted
ii) to Third Parties
Not Permitted
Not Permitted
Not Permitted
Purpose of Loan i) Personal purposes or for i) Personal purposes or Personal requirement and / a. In India carrying on business for carrying on business or business purpose.*
activities *
activities.*
i) to the Account holder
ii) Direct investment in ii) Direct investment in India on non-repatriation India on non-repatriation basis by way of basis by way of contribution to the contribution to the capital capital of Indian firms / of Indian firms / companies. companies iii) Acquisition of flat / iii) Acquisition of flat / house in India for his house in India for his own own residential use. residential use. (Please (Please refer to para 6(a) refer to para 9 of Schedule of Schedule1 to FEMA 2 to FEMA 5). 5).
ii) to Third Parties
Fund based and / or non- Fund based and / or non- Personal requirement and / fund based facilities for fund based facilities for or business purpose * personal purposes or for personal purposes or for carrying on business carrying on business activities *. (Please refer to activities *. (Please refer para 9 of Schedule 2 to to para 6(b) of Sch. 1 to FEMA 5). FEMA 5)
b. Abroad Fund based and / or nonTo the account fund based facilities for holder and bonafide purposes. Third Parties
Fund based and / or non- Not permitted. fund based facilities for bonafide purposes.
37
NRI BANKING
4.
Innovative Services to NRI
1. E-statement
It is Safer
It is Faster
It comes in your Mail Box
It is Environment Friendly Now receive an Electronic Deposit Confirmation Advice (E- DCA) for your Fixed Deposits within 1 working day. Note: You need to subscribe for Account Statement via E-mail to avail of this facility.
Subscribing to an E-statement is just [4] steps away:
Log on to your Bank Account
Click on the link - Account Statement by Email
Check in "Subscribe to statements by Email"
Enter your email id & press "Submit"
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NRI BANKING
2. Mobile Banking Discover the quick, simple and convenient way to take command of your Bank Account, from your mobile phone. With ICICI Bank Mobile Banking, you can check your account balance, transfer funds 24 x 7, pay your bills, book bus and flight tickets, recharge your prepaid mobile or DTH connection and do a lot more effortlessly and securely. Our Mobile banking services work with almost all types of handsets and help you access your Bank account easily and securely.
You can access Mobile banking services through: SMS: You can simply send keywords as SMS. Click here for the list of keywords.
Dial *525#: A menu based session connects you to your bank. iMobile: A rich mobile application to carry your bank in your phone. (Also available for your Android / iPhone / Blackberry or other smart phones) Operator WAP sites: Easy to use menu driven banking on leading operator WAP sites.
Choose the Mobile Banking option which suits your banking needs based on your handset, GPRS connection and service operator:
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NRI BANKING
Access Bank Account Funds Transfer Insta Fund Transfer (IMPS) Bill Payment Balance Enquiry Cheque Book Request Last 5 Transactions Stop Cheque Request Cheque Status Enquiry Open a Fixed Deposit Open Recurring Deposit Mobile Recharge Generate MPIN (MPIN is a 4-digit number set by you to execute payments over SMS and *525#. We suggest you choose an MPIN different from your ATM PIN and iMobile Login PIN) Mobile Recharge Credit card
Balance Enquiry Reward Points Last Payment Payment Due Date Other Service Status of Service Request Raised Locate ATM Locate Branch Locate Bank @ Home Drop Box
40
NRI BANKING
3. Internet Banking Banking made convenient, efficient, and hassle-free…at hassle-free…at the click of a button Make the most of our internet banking facility, so that you are never farther than a click away from safe and convenient banking 24x7. What you can do
Go online on Obtain an account balance and transaction statement
Transfer funds
Pay your bills
Open and renew fixed deposit accounts
Place request for cheque book & debit card
Report lost card (hot listing)
Change or cancel mandate holder
Update contact details And much more... What you wil l need need
To start using Internet Banking you would need the following: Login password:
o
o
Your Login password is given in your pin mailer handed in the welcome kit while opening your account If you have misplaced the pin mailer or forgotten your Login password you can generate your password online Visit www.icicibank.com/nri select Internet Banking and click on Generate Password Online button. Enter user ID and registered email ID on Online Password Generation page. 41
NRI BANKING
o
o
o
A unique number shall be generated and sent on your registered email ID. Enter the unique number received on the screen of online "Login Password Generation" and generate the new Login password. To generate your Login password online now please click here.
Transaction Password:
o
o
o
o
o
After logging into Internet Banking with user ID and login password, if you want to carry out any banking transaction, you would be prompted for the Transaction password Your Transaction password is given in your pin mailer handed in the welcome kit while opening your account If you have misplaced the pin mailer or forgotten your Transaction password you can generate it online Log into your Internet Banking account with your user ID and login password Click on service requests tab on the left hand side and select "Online Password Generation - Transaction Password" Password" Select account number for grid card authentication. Post authentication a unique number shall be generated and sent on your registered email ID. Enter the unique number received on the next step of "Transaction Password Generation" page and generate the new Transaction Password. To generate your Transaction password password please click here and login H ow to to log in
Visit our website www.icicibank.com/nri www.icicibank.com/nri
Select Internet Banking
Enter your user ID and Login password in their respective fields
Click on Log-in
42
NRI BANKING
4. Money Transfer > Money To India This internet-enabled wire transfer to anyone in India provides a speedy and convenient money transfer option. What is Power Transfer (Wire-based)?
o
o
o
o
This is Bank's online wire transfer channel – channel – you you can transfer money to India in as less as 48 hours. Errors associated with a normal wire transfer are minimized with Power Transfer's a unique tracking number that enables you to keep track of your remittance. You can also send fixed rupee amounts for your fixed expenses in India. (Fixed Rupee transfer facility is available in SEK and CHF current A/c. Avail Fixed Rupee transfer: (Available in SEK and CHF currencies only) Confirmed exchange rates as applicable at the time of transaction, on sending the funds within the Rupee Transfer Validity Transfer Validity Date. Exact rupee amount transfer to your receiver in India.
– it takes just about 48 – 72 72 hours. Fast money transfers – it – manual intervention is minimal. Error – free free – manual b e remitted. No limit on the amount that can be – you can remit in 10 currencies. Flexible – you No need for either you or your beneficiary to have an account with Bank. Range of easy money transfer options. Electronic transfers into any Bank account with over 2,500 branches in India Electronic transfers into accounts with over 75,000 bank branches of over 100 banks in India
o
Ready Cash payout from any of the 195 Bank branches across 23 cities in India
o
Electronic transfers into any Bank Remittance card account in India
o
Electronic transfers into any resident Visa Debit Card account** issued in India
o
Demand Drafts issued and payable at over 700 locations in India
Online tracking of the status of your funds. Competitive exchange rates.
43
NRI BANKING
Remittance service charge: For Regular Power transfers: SEK 20 / CHF 4 (Inclusive of service t ax @ 12.36%) for amounts of SEK 8000 / CHF 1500 or below. No charge for larger amounts.
For Fixed Rupee transfers: Remittance Service charge: A nominal charge of SEK 20 / CHF 4 (Inclusive of service tax @ 12.3%) compared to the hefty charges incurred on international wire transfers or while sending money through money transfer agents.
Login with your Money2India login id. (New users register here). Select Power Transfer (Web Based Wire Transfer) as transfer mode under Home page or under 'Transfer Money' tab on the home Page Select your bank account or choose 'Add New Account' to enter new bank account details. Select your existing receiver or choose 'Add New Receiver' to enter receiver details in the case of a new receiver -- i.e., name, address, bank account number. Select the purpose of remittance and select 'Next'. Once the details are verified, you will get a form on your screen that has a tracking number and details of the remittance instructions to your bank Take a printout of the "Wire Transfer" form and give it to your local bank for execution, along with the required funds. Keep the customer copy for your reference The local bank wills then wire-transfer the money to Bank through its correspondent bank (List of Correspondent Banks for Web Based Wire transfer)). You can remit the amount to Bank's account through any bank of your choice. If the beneficiary has a Bank Account or a bank account with any of the ban ks that are networked or has a resident Visa Debit card account, the money is directly credited to his/her account. Else the money is sent as a Demand Draft to the beneficiary. For Ready Cash, funds transferred can be collected in cash by your beneficiary from any of the select Bank branches in India. You get automatic e-mail updates on the status of your remittance. You can also track the same online through your unique tracking number through ―Track transfer‖ facility. The remittance amount has to be transferred to Bank's account (with its correspondent banks).
44
NRI BANKING
5. Exchange Rate Calculator
Currency:
(--Select Currency - -)
Transfer Mode:
(--Select Product --)
Delivery Mode:
(--Delivery Mode --)
Enter Amount: Indicative Exchange Rate Actual exchange rate applied to your transaction will be as prevailing on the date and time of conversion of your money Confirmed Exchange Rate (Fixed Rupee transfer) Exchange rate is confirmed at the time of transfer initiation. Specify amount in Rupees that you want your receiver to get
45
NRI BANKING
6. NRI Edge Account (Enhanced Data Rates for GSM Evolution) Exclusive banking just for you — with top-end offerings, premium service and privileges.
What i s NRI Edge?
NRI Edge is a premium banking status that is power-packed with offerings such as platinum debit card with high withdrawal and spends limits, dedicated 24x7 phone banking team and remote relationship manager. Wh y choose NRI Edge?
NRI Edge gets you premium offerings, priority service, and personalized convenience for all your India banking needs. Overview Features and Benefits
o
o
o
Card benefits: free international Platinum ATM – cum – Debit card. Higher limits: cash withdrawal limits up to INR 100,000 and spends limits up to INR 200,000 at point of sale terminals. Limits can be customised depending on your needs. Customisable limits: cash withdrawal and POS spend limits can be customised depending on your needs. Free and unlimited access: to any ATM across India. Easy banking: free multi-city check book facility, free demand drafts and pay orders. Dedicated service: remote Relationship Manager works exclusively with you to make your banking convenient across distances too. all your money transfers Preferential exchange rate: on through Money2india.com. Attractive Discounts: free multi-city check book facility, free demand drafts upto a value of INR 1lac per day per account and free pay orders. Priority servicing: no or reduced waiting time at call centres. Travel Insurance benefits: These are 46
NRI BANKING
o
Personal air accident coverage worth INR 10,000,000
o
Coverage against loss of passport or baggage in India
o
Coverage against accident hospitalization in India, worth INR 100,000
o
Coverage for travel to India in case of medical emergency arising on immediate family members Exclusive Invitation: to Webinars on relevant topics like Real Estate, Financial planning etc Service Charge
Quarterly Average Balance There is no minimum balance that must be maintained at all times — you can bring your account balance down to zero.
You need to maintain a quarterly average balance of INR 15,000 in your NRE and NRO Savings Accounts or a total relationship size (within the same customer identity number) of INR 25,000 with ICICI Bank. If you are unable to maintain this minimum balance, quarterly service charges of INR 750 + service tax will be levied. For Student's Accounts, QAB of INR 5,000/- or a total Customer ID Balance of at least INR 25,000/- is required, or else, the account will be charged. ELIGIBILITIY Simple steps to upgrade your account to NRI Edge
1. Fund your account to ensure that your savings account has a minimum balance of INR 1 lac or your Cust-ID has a minimum balance of INR 3 lacs (including FDs). 2. Ensure that you have a NRE SB account under your cust-id. 3. Log-on to your Internet Banking Account, go to Service Request section and click on 'NRI Edge'. Make a request to Upgrade your account to NRI Edge 4. Once your account is upgraded to NRI Edge, you can apply for your Platinum Debit card through your Internet Banking account or through our customer care numbers. 5. You can also upgrade to NRI Edge by calling our Phone Banking team or by visiting your nearest branch in India. 47
NRI BANKING
7. INNOVATION IN BANKING BRANCHES Innovations in banking branches such as Universal banking, offshore banking, retail banking, and wholesale banking for NRI. Open new branches in foreign country to them can also use branch banking at foreign country.
Meaning: Universal banking is a multipurpose and multi functional Financial superstore providing both banking and financial services. A Universal bank may undertake multifarious services under one roof, which Includes: a) Receiving money on current or deposit accounts and lending of money For trade, industries, exports, agriculture etc. b) Mortgage financing; project financing infrastructure lending, asset Securitisation, leasing, factory etc. c) Remittance of funds, custodial services, credit/debit cards, collection of Cheque/bills etc. d) Corporate advisory services, insurance depository service, merchant Banking (brokerage, underwriting new debt and equity shares) foreign Exchange operations. The few objectives of universal banking are as follows: To help in bringing harmony in the role of financial institutions and banks. To offer world-class financial services to the clients by using information technology and cross selling. To reduce per customer cost. To increase per customer revenue. To take benefit of economies of scale.
48
NRI BANKING
5. NRI INVESTMENTS
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 taken by the government on an ongoing basis to attract from them in Indian companies. Some of the investment schemes presently available to Nonresident 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 49
NRI BANKING
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’S 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.
50
NRI BANKING
NRI’S 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;
51
NRI BANKING
TS 1
Transfer of Shares/Debentures by Non-residents to Residents
FNC Permission to establish a branch office in India by an Overseas Company 1
establishing a Representative Office by Overseas Company for Liaison Activities to open a Project/Site Office in India.
IPI
Company/Individual (declaration) acquiring property
52
NRI BANKING
6. PAN Card for NRIs
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. Applying for a PAN
Form 49A, which is the application form for a PAN, can be downloaded from the Income Tax, UTIISL and NDSL websites: www.incometaxindia.gov.in & www.utiisl.co.intin.nsdl.com The forms care also available at the IT PAN Service Centers and TIN Facilitation Centers. A ―tatkal‖ or priority service has been provided for, to enable speedy allotment of the PAN card through the Internet. The PAN is allotted through e-mail on priority in 5 days as against the normal 15 days to the applicant upon online payment through a credit card. The PAN has lifetime validity. The necessity for a PAN Card to NRIs
53
NRI BANKING
Apart from income returns which must carry the PAN, it is mandatory to submit the PAN in all financial transactions, like the purchase and sale of property in India, payments for purchase of vehicles, foreign visits, securing a telephone connection or making time deposits in a bank worth over Rs.50,000. For NRI‘s, PAN is necessary to conduct monetary transactions in India, invest in stocks, and pay tax on their Indian income. The application for a PAN must be accompanied by:
A recent colored photograph of size 3.5 cms x 2.5 cms on the application form.
A proof of residence and identity (attested school leaving/matriculation certificate/degree/credit
card/voter
identity/ration/passport/driving
license/telephone/electricity bill/employer certificate.
Code of the concerned Assessing Officer of the IT Department obtainable from the IT office where form is submitted.
54
NRI BANKING
DEMAT ACCOUNT:-
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
Removes uncertainty on ownership title of securities
Allows quick allotment of public issues
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
Who offers Demat Facility?
Depository Participants or DPs offer demat account services, which would include banks. Holding a demat account with a bank enables quick on-line dealings, 55
NRI BANKING
ensuring credit of a transaction to the account holder‘s savings account by the third day. Banks have an added advantage over other DPs with their large network of branches. How to Open a Demat Account in India
Fill up the demat account opening form at the nearest Depository Participant
You may refer to either
CDSLathttp://www.cdslindia.com/demat_acct/open_demat.jsp or NSDLathttps://nsdl.co.in/for the list of DPs in India.
Joint demat accounts can be opened, retaining the same order of names
Separate demat accounts have to be opened for different combinations of names in the case of three or more joint holders.
Any number of demat accounts and DPs are permitted
A multiple-sign demat is feasible, operated by several holders
DPs charge a fee for switching shares from electronic to physical form and vice versa, which varies from a flat fee to a variable fee. Remat and demat charges may also show a discrepancy between DPs.
Some DPs offer a discount to frequent traders. No opening balance is required for a demat account.
Supporting documents to open a demat account
Passport-size photograph
Proof of identity, address and date of birth
DP-client agreement on non-judicial stamp paper
PAN Card
The applicant receives an account number and a DP ID number which are 56
NRI BANKING
required for all future communication with the DP. NRI Demat Accounts
NRIs need to fill in ―NRI‖ in the type and ―repatriable or ―non-repatriable‖ in the sub-type on the form. No special permission from the RBI is required by NRIs to open a demat account, though specific cases may require authorization from the designated authorised dealers. NRIs require separate demat accounts for securities under the foreign direct investment (FDI) scheme, which is repatriable; and the Portfolio Investment Scheme and Scheme for Investment which can be either repatriable or nonrepatriable. Repatriable and non-repatriable securities cannot be held in a single Demat account. Resident Indians can continue to hold non-repatriable demat accounts they hold even after they acquire non-resident Indian status. However, when a NRI returns to India permanently, he must inform his designated authorised dealer of his new
status, and a fresh account would have to be opened. The securities held in the NRI Demat account would have to be transferred to the new resident demat account, and the NRI Demat account closed. The Demat account would have to be linked with the NRI‘s NRO account for non-repatriable accounts and NRE accounts for repatriable accounts to credit dividends and interest.
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NRI BANKING
QUESTIONNAIRE OF BANKING SERVEY FOR NRI 1. Which banking channel do you use mostly for banking? ( ) Branch Banking, ( ) Internet Banking, ( ) Mobile Banking, ( ) ATM, 2. Do you like to use Exchange rate Calculator? ( ) Yes ( ) No 3. Do you have PAN card? ( ) Yes
(
) No
4. Which Type of account do you use? ( ) Saving ( ) Current ( ) Fixed ( ) Other 5. Do you use DEMAT account for buying and selling of shares? ( ) Yes ( ) NO 6. How much Tax benefits you want for Tax exemption? ( ) >30% ( ) 40% ( ) 50% ( ) 50< 7. Do you like RBI Investment policy suitable For NRI? ( ) Yes ( ) No
58
NRI BANKING
8. What sort of banking activity will you use? ( ) personal accounts, ( ) investment related, ( ) overseas transactions, ( ) taking loans, 9. Which do you prefer National or Private Banks? ( ) National Bank ( ) Private Bank 10.How Many Customers are still using traditional ways of banking transaction? ( ) >20%, ( ) 30%, ( ) 40%, ( ) < 50%
11.What do you feel about overall service quality of your bank? ( )Excellent, ( )good, ( )average, ( )poor 12.How often do you use internet banking? ( ) daily, ( ) weekly, ( ) monthly, ( ) yearly, 13.Bank officer have knowledge of bank services and product. ( ) Yes, ( ) No 14.Would you use electronic delivery of your account notice and statements? ( ) Yes, ( ) No 15.Are you satisfied with this survey? ( ) Yes, ( ) No
Name:
Occupation:
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Location:
NRI BANKING
DATA INTERPRETATION AND FINDING
1. Which banking channel do you use mostly for banking? Branch banking
15
Internet Banking 18
Mobile banking
ATM
5
12
40% 36% 35% 30% 30% 25%
24%
Branch Banking Internet banking
20% mobile banking ATM
15% 10% 10% 5% 0%
Data interpretations of which banking channel do you like most for banking? From graph branch banking 30%, internet Banking 36%, mobile banking 10%, ATM 24%. Final revel is internet banking 36% is most useful for banking channel.
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NRI BANKING
2. Do you like to use Exchange rate Calculator? Yes
No
30
20
70% 60% 60%
50% 40% 40%
Yes No
30%
20%
10%
0%
Data interpretation of do you like to use exchange rate calculator From Graph Yes 60% and No 40%, Final reveal is Yes 60% use exchange rate calculator this is useful for currency convertibility.
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NRI BANKING
3. Do you have PAN card? Yes
No
40
10
90% 80% 80% 70% 60% 50%
Yes
40%
No
30% 20% 20% 10% 0%
Data interpretation of do you have PAN card. From graph Yes 80% and No 20%. Final reveal is 80% Yes PAN card is necessary for bank account.
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NRI BANKING
4. Which Type of account do you use?
Saving
Current
Fixed
Other
18
12
16
4
40% 36% 35%
32%
30% 25%
24%
Saving Current
20% Fixed Other
15% 10%
8%
5% 0%
Data interpretation of which type of account do you use. From graph Saving 36%, Current 24%, fixed 32%, other 8%. Final reveal is saving account 36% is most use in bank account.
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NRI BANKING
5. Do you use DEMAT account for buying and selling of shares? Yes
No
29
21
70%
60%
58%
50% 42% 40%
Yes No
30%
20%
10%
0%
Data interpretation of do you have DEMAT account for buying and selling of shares. From graph Yes 58% and No 42%. Final reveal is Yes 58% DEMAT account is most useful for buying and selling of shares.
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NRI BANKING
6. How much Tax benefits you want for Tax exemption? >30%
40%
50%
50%<
11
9
12
19
40%
38%
35% 30% 25%
24%
>30%
22%
40% 20%
18%
50% 50<
15% 10% 5% 0%
Data interpretation of how much tax benefits you wants tax exemption. From graph >30% is 22%, 40% is 18%, 50% is 23% and last one is 50 more than is 37%. Final reveal is more than 50< is 37% want tax exemption, more tax exemption is more profitable for bank Customers.
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NRI BANKING
7. Do you like RBI Investment policy suitable For NRI? Yes
No
32
18
70% 64% 60%
50%
40%
36%
Yes No
30%
20%
10%
0%
Data interpretations of do you like RBI Investment policy suitable for NRI from graph Yes 64%, and No 36%. Final reveal is yes RBI investment Policy is suitable for NRI.
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NRI BANKING
8. What sort of banking activity will you use? Personal
21
45%
Investment related 6
Overseas transactions 14
Taking loan
9
42%
40% 35% 30%
28% Personal accounts
25%
Investment related
20%
Overseas transctions
18%
Taking loans 15%
12%
10% 5% 0%
Data interpretation of what is sort of banking activity will you use. From graph Personal account 42%, investment related 12%, overseas transactions 28%, Taking loans 18%, Final reveal is personal account 42% is more using for banking activity.
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NRI BANKING
9. Which do you prefer National or Private Banks?
60%
Yes
No
28
22
56%
50% 44% 40% National bank 30% Private bank 20%
10%
0%
Data interpretation of which does you prefer national bank or private bank. From Graph National Bank 56% and Private Bank 44%. Final reveal is National Bank most useful.
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NRI BANKING
10.How Many Customers are still using traditional ways of banking transaction? >20%
30%
40%
50%<
4
23
14
9
50%
46%
45% 40% 35% >20%
28%
30%
30% 25% 40% 18%
20%
50%<
15% 10%
8%
5% 0%
Data interpretation of how many customers are still using traditional ways of banking transaction. From graph >20% is 8%, 30% is 46%, 40% is 28% and < 50% is 21%. Final reveal is 30% people are using traditional ways of banking transaction.
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NRI BANKING
11.What do you feel about overall service quality of your bank?
40%
Excellent
Good
Average
Poor
8
19
15
8
38%
35% 30% 30% 25%
Excellent Good
20% 16%
average
16%
poor
15% 10% 5% 0%
Data interpretation of what do you feel about overall service quality of your bank. From graph Excellent 16%, Good 38%, average 30% and poor 18%. Final reveal is 38% good service provide their bank.
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NRI BANKING
12.How often do you use internet banking?
45%
Daily
Weekly
Monthly
Yearly
9
21
12
8
42%
40% 35% 30% Daily 24%
25% 20%
Weekly monthly
18% 16%
Yearly
15% 10% 5% 0%
Data interpretation of how often do you use internet banking. From graph Daily 18%, weekly 41%, Monthly 24% and Yearly 18%. Final reveal is 41% people weekly use internet banking.
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NRI BANKING
13.Bank officer have knowledge of bank services and product. Yes
No
31
19
70% 62% 60%
50%
40%
38% Yes No
30%
20%
10%
0%
Data interpretation bank officer have knowledge of bank services and product. From graph Yes 62% and No 38%, Final reveal is Yes, Bank officer have knowledge of bank product and services.
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NRI BANKING
14.Would you use electronic delivery of your account notice and statements? Yes
No
21
29
70% 58%
60%
50% 42% 40%
Yes No
30%
20%
10%
0%
Data interpretation, would you use electronic delivery of your notice and statements? From graph Yes 42% and No 58%. Final reveal is No; people still like to use offline of notice and statements of account.
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NRI BANKING
15.Are you satisfied with this survey? Yes
No
50
0
120% 100% 100%
80% Yes 60% No 40%
20%
0%
Data interpretation, are you satisfied with this survey? From graph Yes 100% and No 0%. Final reveal is yes 100% all people satisfied with this survey.
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NRI BANKING
FINDING:
Are innovation is required at branch banking?
Is internet banking is most useful service?
Use of Mobile Banking
Tax Slot Increase
Use of DEMAT account
Bank officer have Knowledge of bank service and product.
RBI policy is Good for NRI
SUGGESTION:
Yes, Innovation required in Branch banking and branch also open new branch at foreign country. Yes, Internet Banking is most useful channel of transactions and fund transfer etc. work on more at internet banking. Yes, Mobile banking is good for mobile top up, pay light bill, or small small payment for we can use mobile banking.
Yes, Increase Tax slot of earning income from India for NRI.
DEMAT account is very useful for buying and selling of shares.
No, Bank officer have no knowledge of service and product. They are required to some training and learn foreign language also. Yes, RBI Policy is good for NRI, RBI provide many scheme and offer to NRI.
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NRI BANKING
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. Result of my survey Online or electronic use is more and more in present and also will in future. NRI feel comfortable with Indian bank service.
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