Reserve Bank of India vide Notification No RBI/2013-2014/437 A.P. (DIR Series) Circular No. 87 dt.January 9, 2014, has allowed Indian resident relatives to become Joint Account Holders with Non-Resident Indians.
The highlights of the Notification are:
- Such an account will be treated as resident bank account for all purposes and all regulations applicable to a domestic account will be applicable.
- The joint account holder facility will be extended to all types of resident accounts, including savings bank account.
- Cheques, instruments, remittances, cash, card or any other proceeds belonging to the NRI close relative shall not be eligible for credit to this account. There will be major challenges in terms of Electronic Payments. In Electronic Payments viz NEFT/RTGS etc, only the Account Number is validated in the first phase of verification.
- The NRI close relative shall operate such account only for and on behalf of the resident for domestic payment and not for creating any beneficial interest for himself.
- Where the NRI close relative becomes a joint holder with more than one resident in such account, such NRI close relative should be the close relative of all the resident bank account holders.
- Where due to any eventuality, the non-resident account holder becomes the survivor of such an account, it shall be categorized as Non-Resident Ordinary Rupee (NRO) account as per the extant regulations.
- Yes, the onus will be on the non-resident account holder to keep AD bank informed to get the account categorized as NRO account and all such regulations as applicable to NRO account shall be applicable. This will be a major relief to AD Banks.
- An explanation for actual need for such a facility and a declaration duly signed by the non-resident account holder must be provided to the bank.
Background: In terms of A.P.(DIR Series) Circular No.12 dated September 15, 2011 individuals resident in India were 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 savings bank accounts on “former or survivor” basis. Such non-resident Indian close relatives were not eligible to operate the account during the life time of the resident account holder in terms of said instructions.
Reserve Bank has received representations that for operational convenience the Non-Resident Indians (NRIs), as defined in Regulation 2(vi) of FEMA Notification No.5 dated May 3, 2000, may be permitted to operate such accounts on “Either or Survivor” basis. Accordingly, on a review, it has been decided that AD banks may include an NRI close relative (relatives as defined in Section 6 of the Companies Act, 1956) in existing / new resident bank accounts as joint holder with the resident account holder on “Either or Survivor” basis.