Reserve Bank of India Guidelines on NRIs Remittance

NRI remittances in India are governed under the Foreign Exchange Management Act (FEMA). Under the said Act, RBI has been given the critical role to control the transactions involving foreign exchange. RBI is the apex bank in India and has ample powers to issue guidelines and make rules for regulating the deposit and withdrawal of Indian and foreign currency by NRIs.

Remittances are permitted through authorized dealers, i.e. a person, empowered by RBI to deal in foreign currency and it usually includes banks.

NRIs are allowed to open and maintain the following types of accounts with authorized dealers in India:

• NRE (Non-Resident External)
• NRO (Non- Resident Ordinary)
• FCNR (B) (Foreign Currency Non-Resident Bank Account)

There is no limit of remittance from NRE and FCNR accounts. An NRI or POI may remit an amount up to USD one million in one financial year. But these accounts have restrictions regarding the type of funds they can receive in credit. Credits permissible in the accounts are inward remittances from outside India, income from investment in India etc.

There are restrictions on remittance from an NRO account. Gifts or loan from a resident Indian goes to NRO a/c.

RBI allows following remittances:

Remittance of Income:

NRIs can earn income in India in the form of rent, dividend, pension, interest etc. This income, after payment of due taxes, can be remitted through NRO account.

NRIs can credit the current income in NRE account also if permitted by authorized dealers. The authorized banks subject to certain conditions can allow income remittance through NRE account.

Remittance of assets:

• Sale proceeds of an asset acquired by inheritance or settlement,
• Sale proceeds of immovable property purchased out of rupee funds in India.
• Balance out of NRO account

All these can be remitted for any bona fide purpose, up to USD one million per financial year after payment of taxes. Bank requires documentary evidence of inheritance/sale. If the amount exceeds the stipulated limit, the permission of RBI is mandatory.

A certificate is needed from a Chartered Accountant certifying that applicable taxes have been paid.

Remittance of sale proceeds of immovable property:

If the property was purchased by the means of foreign currency funds from NRE/FCNR account, the maximum amount of repatriation could be the equivalent of the foreign currency of the amount paid for the purchase. Repatriation can only be allowed up to two residential properties, however, in the case of commercial property, there is no such limit.

In case the residential property was obtained by taking a loan from AD bank, the limit of remittance is the amount of loan repaid using inward remittance through proper banking channels.

The guidelines/rules for remittances are different for the citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.

Banks require the following information for arranging the remittance services:

• Name and address of the customer and beneficiary
• Bank account details of the beneficiary
• Bank account details of the foreign bank
• The amount, Currency type and Purpose of remittance
• Bank Codes

NRIs must keep in mind the bank charges payable for processing the transactions. It is in the best interest of NRIs to follow the guidelines.