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THE
ORANGE
HUB

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2 mins Read | 2 Years Ago

FEMA Regulations for NRIs

FEMA Regulations for NRIs

The Government of India enacted the Foreign Exchange Management Act (FEMA) in 1999 to formulate rules and regulations concerning the flow of currency across international borders. Non-Resident Indians (NRIs) must be aware of the specific fundamental statutory provisions in this regard, as FEMA rules for NRIs may impact the operations and financial activities within India by NRIs. Below are few FEMA regulations every NRI must be aware of:

  • Banking Operations in India – An NRI cannot maintain a Resident Savings Account in India. As such, if he/she wishes to conduct any banking transactions, he/she is required to open NRI Account in India. FEMA regulations allow NRIs to open three types of bank accounts, namely, Non Resident External (NRE), Non Resident Ordinary (NRO) and Foreign Currency Non Resident (Bank) Accounts [FCNR (B)]. While NRE and NRO Accounts are maintained in Indian Rupees, the FCNR (B) Account stays denominated in the foreign currency itself. Different types of NRI Accounts have different features including different rules of NRI taxation, allowability of rupee credits in account, repatriability of the balance in NRI Accounts, etc. and accordingly, NRIs must make an informed decision about the type of account to be opened by them. Further, NRIs must intimate the Bank of any change in their residential status as per FEMA rules, since such change in residential status impacts the operations of the Bank Accounts. This is because you are not allowed to operate NRE/NRO Accounts as a Resident Indian and a Non-Resident is not allowed to operate a Resident Savings Account.
  • Number of Bank Accounts in India – An NRI is free to open NRI Accounts with any authorised bank. Further, there is no prohibition under FEMA regulations for NRIs to open and maintain more than one type of accounts and also more than one account within the similar category of NRI Accounts as discussed above.
  • Sending/Carrying Foreign Currency to India – An NRI can remit foreign currency into India without any limit. However, in case he/she carries currency notes, travellers' cheques and banknotes while travelling to India, a declaration is required to be made to Custom authorities on arrival in India through a specified Currency Declaration Form (CDF). Such declaration is not required; if:
    • the foreign currency notes are less than or equal to US$ <5,000>, OR  
    • total of travellers’ cheques and banknotes are less than or equal to US$ <10,000> within which the foreign currency notes are less than
  • Acquisition of immovable property – There is no restriction specifically on NRIs to purchase residential or commercial property in India. Further, besides buying such property, NRIs can also receive immovable properties through inheritance or as gifts from relatives. However, they cannot acquire agricultural land, plantations, and farmhouses, etc., (except through inheritance) as the transactions are covered under the list of prohibited transactions.

 

Disclaimer

The contents of this document are meant merely for information purposes. The information contained herein is subject to update, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment or availing of any products and services. Any investment decisions that may be made by you or any decision to avail of any products and services shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient’s own risk. The information set out in this document has been prepared by ICICI Bank/third party based upon projections which have been determined in good faith by lClCl Bank/third party and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. ‘lClCl’ and the ‘I-man’ logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.

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