Article

Accounts and Investment
June 06 , 2012

Bank Accounts

As all bank accounts have to be re-designated as Non Resident (Ordinary) Accounts. Emigrating Indians should inform their bankers requesting them to convert their accounts into NRO Accounts. No special form has been prescribed for this purpose. A simple letter is enough. Once an account is designated as NRO account, the operations in the account are permitted, as per the terms and conditions governing the NRO accounts.

  1. Amounts may be withdrawn for travel expenses within India. RBI permission is not required.
  2. Money in the NRO Account can be used for the payment of the NRI's own travel to and from India as well as for the travel of his wife, children and other dependants on Indian carriers. RBI permission in not required.
  3. Professional fees to a consultant can be paid from the NRO Account. No RBI permission is required.
  4. If a person going abroad wishes to maintain his parents/relatives in India, the account can be opened jointly with the parents/relatives concerned. He can also have a joint account with residents in India.

It must be borne in the mind that the Non-Resident does not make available foreign exchange to any person resident in India, against reimbursement in Rupees, or in any other manner.

Shares

On becoming an NRI, the individual who owns shares in companies should write to the companies concerned to record the change of status as 'Non-Resident' in their registers. He should also inform the Depository Participant (DP). In many instances, it is enough to inform the DP. The DP would inform the registrars of the company. For this purpose he should furnish the following information:

  1. Nationality
  2. Date of leaving India
  3. Foreign address
  4. Number of shares held and their face value
  5. Name and branch of the bank where the NRI's bank account and the account number.

Immovable Property

Indians going abroad, whether they remain citizens of India or acquire foreign citizenship are permitted to hold immovable property in India under the provisions of Section 6 (5) of FEMA, 1999.

Deposits with companies

NRI's may continue to keep deposits with the Indian companies including non banking finance companies (NBFCs) registered with RBI, under the provisions of Section 6 (5) of FEMA, 1999.

Mutual Funds

Permission from the Reserve Bank of India is not required, in order to hold units of mutual funds and Government bonds.

Gold & Jewellry

RBI permission is not required to keep gold, jewelry and precious stones in India.

Continuation as a Director

No permission is required by an NRI to continue as a Director of an Indian company. The Reserve Bank of India has granted general permission vide Notification No. FEMA 16/2000, dated May 3, 2000, to companies in India to make payments in Indian Rupees to their Non-Resident (including foreign nationals), a non-whole time directors while on visit to India on company business such as attending board meeting s, towards sitting fees, commission or remuneration by way of monthly or quarterly or annual payment, in accordance with the provisions contained in the company's memorandum of association or articles of association or in any agreement entered into by it or in any resolution passed by the company in a general meeting or by its board of directors. The company shall, however, comply with the requirements of any law, rules, regulations, directions, etc., applicable for making such payment. In this connection it is to be noted that necessary approval form the Central Government, under Section 309 (4) or Section 310 of the Companies Act, 1956, wherever it applies, should be obtained.

Continuation as Trustee

The emigrating Indian can continue as a trustee of a private or public trust, without the permission of the Reserve Bank of India.

Continuation as 'Karta' of Hindu Undivided Family (HUF)

The emigrating Indian can also continue as 'karta' of a HUF, without the permission of the Reserve Bank of India.

Compulsory Insurance under Pravasi Bhartiya Bima Yojana

The Government has launched a scheme called Pravasi Bhartiya Bima Yojana, 2003, as social security and welfare measure for the citizens of India, going abroad for employment. The scheme applies to all citizens of India who apply for and obtain an emigration clearance. Under the scheme it shall be mandatory for all NRIs with Emigration check Required (ECR) endorsement on their passports to take an insurance policy from any insurance company operating in India and duly registered with the Insurance Regulatory and Development Authority (IRDA). Such insurance policy should cover the following:

  1. Minimum validity period should be two years or the actual period of employment contract, whichever is less;
  2. Minimum sum assured must be Rs. 2 lakh in the event of death or permanent disability leading to loss of employment while in employment abroad;
  3. In case of death, cost of transporting the dead body and economic class return airfare of one attendant should be reimbursed by the insurance company. The reimbursement claim should be filed within 90 days of completion of journey;
  4. In the event of death or permanent disability within 12 months of taking policy, due to accident/physical injury, sum assured will be reimbursed;
  5. Medical insurance cover of minimum Rs. 50000, in case of hospitalization of insured worker on grounds of accident injury/sickness/ailments/diseases, provided medical treatment is taken in India. The company should either provide cash-less hospitalization and/or reimburse the actual medical expense;
    1. If the insured falls sick or is declared medically unfit for the job and the service contract is terminated within the first 6 months of the policy actual one-way economy class airfare should be reimbursed;
    2. If the terms of the employment are substantively changed to the disadvantage of the insured, or if the employment is prematurely terminated within 3 months, for no fault of emigrant, one way economy class airfare should be reimbursed;
    3. Maternity benefit to women emigrants for a minimum of Rs. 20000 should be given. This may be restricted to actual, provided treatment is taken in India;
    4. In the event of death or permanently disability of the insured person, his family consisting of spouse and 2 dependent children up to 21 years of age shall be entitled to hospitalization cover for a maximum of Rs. 10000 per annum;
    5. Policy period may be 6 months, one year or 2 years. The premium should be fair and reasonable. Service tax may be charged extra.

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