Is it possible to open a Joint NRE or NRO Savings Account and Fixed Deposit
Is it possible to open a Joint NRE or NRO Savings Account and Fixed Deposit?
A Non-Resident Indian (NRI) can open the following types of bank and deposit accounts:
- NRE Accounts
- NRO Accounts
- FCNR (B) Accounts
One can hold such an account either in his/her name or can be held in a joint name. However, there are certain restrictions in respect of joint ownership of different NRI Accounts as per the extant RBI regulations.
Provisions applicable to the joint account under different NRI Account categories:
- NRE Account – NRE stands for Non Resident External. It is a specific category of bank accounts which accept funding only through foreign currency transactions. With repatriation and tax benefits on interest income, an NRE Account can be jointly held with another NRI or Resident Indian. In case the joint holder is a Resident Indian; mode of operation shall be "Former or Survivor (FOR)" as per which, only primary applicant shall have rights to operate the account. The Resident Joint Applicant can be added as Mandate Holder in the account, post which Resident Holder may operate the account.
- NRO Account – NRO stands for Non Resident Ordinary and can be operated by the account holder for regular banking needs for receiving foreign currency remittances as well as domestic rupee transfers. One may hold a joint NRO Account with another NRI or with a Resident Indian. In case the joint holder is a Resident Indian; mode of operation shall be "Former or Survivor (FOR)" as per which only primary applicant shall have rights to operate the account. The Resident Joint Applicant can be added as Mandate Holder in the account, post which Resident Holder may operate the account.
- FCNR (B) Account – FCNR (B) stands for Foreign Currency Non Resident (Bank). Such accounts only allow deposit accounts denominated in specific foreign currencies. FCNR Accounts can be jointly held with another NRI or Resident Indian. In case the joint holder is a Resident Indian; mode of operation shall be "Former or Survivor (FOR)"
- Why should one have a joint NRI Account?
Having the account in the joint name is a personal choice of the account holder. Here are a few benefits of having a Joint NRI Account:
- Administrative convenience – One can have a Joint NRO Account with a Resident Indian, which allows a sort of administrative convenience for the account holders. While the NRI may be staying away from the homeland, the persons staying within India can take care of all the formalities required in terms of account operations. Such formalities may include KYC compliance, requesting account details and statements from bank branches, getting the account reactivated from dormancy, etc.
- Ease of Operations – Having a joint owner allows ease of operations for the bank account. Be it an NRE or NRO Account; one can always have the account being operated by any of the joint holders, including remitting and withdrawing funds from the bank accounts. For example, one may have his/her parents in India as Joint Account holders to an NRO Account. One may transfer the funds to his/her NRO Account, which can be withdrawn by the parents in India. Being a joint owner allows access without the physical presence of the NRI Account holder if the operation instructions are ‘Former or Survivor.’
- Further, even with joint ownership, one may add such instructions that any banking activity may need signatures of any specified account holder or at least two or all the joint holders. As such, the joint ownership can be made flexible to allow the banking operations as per the convenience of the account holders.
- Protection of asset in case of any unfortunate event – Joint ownership of NRI Accounts also provide implicit protection for the account balance in case of any unfortunate event that may happen with the account holder. It comes in handy, especially during the times when nomination and estate planning have not been put into practice. Claiming the balance as legal heir in the absence of any nomination can cause a lot of legal hassles for the family and having a Joint Account holder eliminates such an eventuality.
Joint Accounts render several benefits in terms of operational convenience and ease. NRI Account holders may consider joint ownership of their NRI Accounts as per the extant RBI regulations for the respective account categories.
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