Miscellaneous FAQs

Operations by Power of Attorney Holders (P.O.A)

1. Can NRI give Power of Attorney to a resident to operate his account and for making investments on his behalf?

  • NRI can appoint a resident as his Power of Attorney holder to make all his local payment in rupees from his NRE / NRO accounts, including payments for eligible investments subject to compliance with relevant regulations made by Reserve Bank of India from time to time.

  • The P.O.A can repatriate the funds to the account holder only and not to third parties.

2. What are the precautions to be observed in the operations to be allowed by the Power of Attorney holder (P.O.A)?

A power of attorney holder cannot.

  • Open and close NRI accounts.

  • Make payment by way of gifts.

  • Transfer funds to other NRE accounts.

  • Cannot raise loans/execute documents on behalf of NRI.

  • Cannot tender Foreign Currency/ Foreign Currency Travelers Cheques for credit of account.

3. Change of Residential Status

From Resident to Non-Resident:

The existing account will be designated as a Non-Resident (Ordinary) account.

From Non-Resident to Resident:

  • NRO account shall be re-designated as resident rupee accounts.

  • NRE accounts shall be re-designated as resident accounts or the funds held in these accounts may be transferred to the RFC account at the option of the account holder immediately upon the change of status.

  • FCNR (B) deposits may be continued at the contracted rate till maturity if desired by the depositors. Such deposits shall however be treated as resident deposits from the date of return of account holder to India. On maturity it will be converted in to resident rupee deposit account or RFC account (if the depositor is eligible to open RFC account), at the option of the account holder and interest on the new deposit (rupee account or RFC account) shall be payable at the relevant rates applicable for such deposits.

Loan Facilities

4. What are the different loan facilities available to NRIs?

  • NRIs can avail loans against the security of their NRO / NRE deposits. (The maximum amount that can be sanctioned is Rs. 1 crore).

  • NRIs can also avail housing loans and vehicle loans.

  • NRIs can also avail loans for business purposes.

5. Are there any restrictions about the purpose for which the loans can be taken?

The loans cannot be taken for re-lending, carrying on agriculture or plantation activities or for investment in real estate business.

6. Tax Benefits for NRIs

  • Interest on NRE & FCNR deposits are free of Income Tax.

  • 30% Tax + Educational Cess as applicable will be deducted at source on all interest income in NRO accounts.

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