Non-Resident Indians live abroad for employment and have their loved ones in India. Hence, many NRIs wonder if they can open a joint account with Indian residents. Here we will explain different aspects of NRI joint account with resident Indians.
Can NRI Open Joint Account with Resident Indian?
Well, opening an NRI joint account with resident Indians was not allowed till 2011. But the Reserve Bank of India has allowed NRI to open a joint account with resident Indians on “either or survivor” basis, subject to fulfillment of stated conditions. Such joint accounts will be treated as resident bank accounts and will be subject to all the regulations applicable to resident bank accounts.
SBNRI is a business partner of leading Indian banks. An NRI can apply for an NRE/ NRO account with one of these Banks by clicking the button below.
Banks can include an NRI close relative in existing or new resident bank accounts as a joint holder with the resident account holder. For example, a daughter or son residing abroad can operate a joint account with his/her resident Indian parents. However, NRIs can’t be a single holder of a resident savings account.
NRO Joint Account with Resident
As per the FEMA Regulations, 2016, NRI can open an NRO joint account with a resident Indian on “former or survivor” basis. The former alone can operate the account. However, if the former expires, the survivor can operate the account. For example, Rajiv, a UK-based NRI, holds a joint account with his daughter who is a resident Indian, on ‘former or survivor’ basis. In case of an unfortunate event, his daughter can operate the account.
Interest earned on an NRO account is taxable in India. Hence, in case of an NRO joint account, it is important to state who is the real owner of the funds and should be taxed accordingly. Clubbing provisions may apply and the taxation can be shifted to the other person under the income tax law. While filing the tax return in India, the account holder can claim an aggregate deduction of up to Rs. 10,000 for interest earned from savings accounts.
Guidelines for NRI Joint Account with Resident
- A joint account can be held by an NRI with his/her resident close relative. Close relatives include parents, siblings, spouse of the NRI, siblings’ spouse, children, grandparents, and spouses of grandchildren.
- All regulations applicable to a resident bank account shall be applicable to such NRI joint accounts.
- The resident Indian will be the primary account holder and the NRI will be the second account holder in the joint account.
- The bank will ask for a signed declaration from the non-resident account holder which states that the NRI will not use the cash in violation of the Foreign Exchange Management Act (FEMA) and will be responsible for any repercussions on account of violation of FEMA.
- Cash, cheques, remittances, instruments, cards or any other proceeds belonging to an NRI account holder shall not be eligible for credit to this account.
- The funds in the account can’t be transferred outside India, nor can be offered as a gift. Fund transfer to NRI accounts, such as NRE account and NRO account, is not allowed.
- The NRI account holder can use the fund for or on behalf of the resident for domestic payments in India.
- An NRI can be a joint account holder in more than one savings account with resident bank account holders.
- If due to any reason the NRI account holder becomes the survivor of such an account, the account shall be categorized as a Non-Resident Ordinary Rupee (NRO) account.
- It will be the responsibility of the non-resident account holders to intimate the bank to convert resident account to NRO account and all regulations applicable to an NRO account shall be applicable.
NRI account related questions & answers
Can a resident be a joint account holder with NRI in NRE NRI accounts?
Yes, a joint account can be opened with a Resident Indian who is a close relative. The mode of operation is permitted on ‘Former (NRI) or Survivor’ basis only. The NRI will be the primary or first account holder in the joint account and the resident will be the second applicant.
The NRI applicant is known as the “Former,” and the following close relatives of an NRI applicant are eligible for joint NRE accounts:
- Hindu Undivided Family (HUF)
- Husband and wife
- Persons related in a manner prescribed, which includes:
- Father (including step-father)
- Mother (including step-mother)
- Son (including step-son)
- Son’s wife
- Daughter
- Daughter’s husband
- Brother (including step-brother)
- Sister (including step-sister)
Banks that Allow NRE Joint Accounts
- State Bank of India (SBI)
- ICICI Bank
- Axis Bank
However, some banks like Federal Bank allow an NRE joint account with only other NRIs or OCIs.
Can an NRI have a resident bank account?
No, NRIs can’t open resident accounts. If individuals have a resident account, they have to close the resident account after their status changes to NRI. They can open the following NRI accounts in India:
- Non-Resident External Rupee (NRE) Account
- Non-Resident Ordinary Rupee Account (NRO) Account
- Foreign Currency Non-Resident (FCNR) Account
- Resident Foreign Currency (RFC) Savings Account
- Special Non-Resident Rupee (SNRR) Account
Can NRI give a gift to resident Indian?
Yes, a Non-Resident Indian can give gifts to resident Indians, both relative and non-relative, in the form of cash, cheque, item, property, etc. Income tax implication and exemption shall be applicable as per the type of gift and receiver.
How can I change my NRI account to a resident account?
You will need to submit the following documents to convert your NRI account to a resident account:
- Account modification form to update the bank and address details of your account.
- Trading account closure form for closing the NRI trading account, if any.
- Application form for opening a resident trading account.
- 1 photograph.
- Self-attested copy of PAN card.
- Address proof (any of): Driving License/ Voter ID/ Passport/ Aadhar Card/ Bank statement.
- Income proof (any of): Latest salary slip/ ITR/ Form 16/ 6-month bank Statement.
- Bank proof: Personalized canceled cheque (name printed on it)/ bank statement/ bank passport (with the visible bank account number, MICR and IFSC code)
What is the penalty for not converting to NRO account?
When the resident status of an Indian changes to NRI, they have to close the resident bank account or convert it into an NRO account. Continuing with the same resident status is illegal for NRIs as per FEMA (Foreign Exchange Regulation Act). If an NRI flouts the law, he/she will be liable to pay a penalty up to 3 times the amount involved in it or Rs. 2 lakh when the sum is not quantifiable, as per Section 13 of FEMA, 1999. In addition, a penalty of Rs. 5,000 will be charged on a daily basis from the first day of contravention until the penalty is fully paid.
Hence, individuals must convert their resident account to NRO account after the change in resident status.
Can my friend deposit money in my NRO account?
Yes, your friend can deposit money in your NRO account from India as well as overseas.
Can I have two NRE accounts?
Yes, NRIs can open more than one NRE savings bank account but with different banks in India. Multiple NRI accounts with the same bank are possible only if the account types are different i.e. NRE account, NRO account, etc.
At SBNRI, we strive to provide NRI customers with seamless advisory services related to NRI bank account opening, investment in mutual funds and stocks, real estate business, taxation, repatriation and a lot more. NRI customers can get help from expert legal and technical advisors at every step of the way.
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