To facilitate foreign nationals in collecting dues in India, the Reserve Bank of India on Thursday said banks can re-designate their accounts in the country as nonresident ordinary (NRO) accounts after foreign nationals leave the country. Banks should obtain the details of the legitimate dues expected to be received into the account from the account holder. The amount repatriated abroad should not exceed $1 million per financial year. The funds credited to the NRO account should be repatriated abroad immediately, subject to banks being satisfied about the payment of applicable taxes in India. The debit to these accounts should be only for repatriation to the account holder’s account maintained abroad, RBI said.
A.P. (DIR Series) Circular No. 70 ,
Date – June 9, 2011
Remittance of assets by foreign nationals- Opening of NRO Accounts
The foreign nationals employed in India holding valid visas are eligible to maintain resident accounts with an Authorised Dealer Category – I (AD Category-I) bank in India. The AD Category-I banks are required to close the resident accounts of such foreign nationals on their leaving the country and transfer their assets to their accounts maintained abroad. In this connection, attention of the AD Category-I banks is invited to paragraph 8 of Schedule 3 to the Notification No. FEMA 5 /2000-RB dated 3rd May 2000, viz. Foreign Exchange Management (Deposit) Regulations, 2000, as amended from time to time, in terms of which when a person resident in India leaves India for a country (other than Nepal or Bhutan) for taking up employment, or for carrying on business or vocation outside India or for any other purpose indicating her / his stay outside India for an uncertain period, her / his existing account should be designated as a Non-Resident (Ordinary) [NRO] Account.
2. The extant instructions have been reviewed so as to facilitate the foreign nationals to collect their pending dues in India. AD Category-I banks may, therefore, permit such foreign nationals to re-designate their resident account maintained in India as NRO account on leaving the country after their employment to enable them to receive their pending bonafide dues, subject to the following conditions
3. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
4. The directions contained in the circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (FEMA) (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Dr. (Smt. Sujatha Elizabeth Prasad)
Chief General Manager-in-Charge