Banking is different in every country. In some countries, doing banking is a great experience and others it may be a real pain; and some countries have technologically advanced; and others, it may be operationally rich. Banking in India has a mixture of pleasure, pain, technologically advanced in some areas, and operationally richer than even advanced nations in certain other areas.

Now, things are changing and there are lot of changes Government / Reserve Bank of India is bringing to simplify the day-to-day life for everyone and NRIs are not exempt. The latest changes they have brought is of immense value to NRIs / PIOs.

There are two important changes which I wish to discuss in this article. First we will take joint accounts. Hitherto joint accounts can be opened by one NRI with another NRI and they cannot have joint account with local people even if they are very close relative. Now, the rules have changed.

On a review, based on a committee report RBI has decided to allow  Non-Resident Indian (NRI), as defined in FEMA, may be permitted to open NRE / FCNR (B) account with their resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on ‘former or survivor’ basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder.

Another change is brought in Savings Bank account maintained by residents in India. The Committee to Review the Facilities for Individuals under the FEMA has recommended that resident individuals may be permitted to include non-resident close relative(s) (relatives as defined in the Companies Act, 1956) as joint account holder(s) in their resident bank accounts.

Now, individuals resident in India may be permitted to include non-resident close relative(s) (relatives as defined in Section 6 of the Companies Act, 1956) as a joint holder(s) in their resident bank accounts on ‘former or survivor’ basis. However, such non- resident Indian close relatives shall not be eligible to operate the account during the life time of the resident account holder.

The definition of relatives as per Section 6 of the Companies Act, 1956 is as follows:

Section 6. Meaning of “Relative

A person shall be deemed to be a relative of another, if, and only if, -

a) The are members of a Hindu undivided family; or

b) They are husband and wife; or

c) The one is related to the other in the manner indicated in Schedule IA.]

List of Relatives

§ Father.

§ Mother (including step-mother)

§ Son (including step-son).

§ Son’s wife

§ Daughter (including step-daughter)

§ Father’s father

§ Father’s mother

§ Mother’s mother

§ Mother’s father

§ Son’s son

§ Son’s son’s wife

§ Son’s daughter

§ Son’s daughter’s husband

§ Daughter’s husband

§ Daughter’s son

§ Daughter’s son’s wife

§ Daughter’s daughter

§ Daughter’s daughter’s husband

§ Brother (including step-brother)

§ Brother’s wife

§ Sister (including step-sister)

§ Sister’s husband

Why  are these changes important?

I feel these two changes are important so that neither the NRI nor the resident is put to inconvenience in case of something untoward happens to the former. They can avoid the cumbersome procedure of settlement of claims either by nomination or by claim.

How to transfer funds fast  within India?

There are lot of doubts / questions raised about transfer of funds within India effectively and fastly. India is one of the countries introduced electronic funds transfer in a big way. It is really true and I am not exaggerating. There are two electronic funds transfer systems introduced in India i.e. Real Time Gross Settlement (RTGS) which allows to transfer funds above Rs.2 lacs to any customer within India on real time basis and National Electronic Funds Transfer (NEFT) which allows you to transfer any amount for the settlement is a delayed settlement. Almost all the banks are members and the banks have identified many of their branches also into the network of RTGS and NEFT and hence it is easy to transfer funds to anyone within India. No more waiting for DDs and paying hefty commission for taking DDs etc.,  and even no more waiting at the receiving end also.

Happy depositing in India! We shall meet with more developments in the next issue of NANAL.

sethuraman sathappan

agm, scotiabank, mumbai