Introduction

Returning Indians are those Indians, who were non-residents earlier and have returned now for permanent stay in India. Reserve bank of India has extended certain facilities to them in order to enjoy the foreign exchange savings abroad as well as the balances lying in the NRE/FCNR Accounts in India and also to hold any assets abroad while they were non-residents.

Duties of Returning Indians

When Non-Residents Indian comes back to India for permanent settlement, it is his duty to inform the Bank where he is having non-resident bank accounts, which include NRO/NRE/FCNR (B) Accounts that "he has become resident and accordingly his bank accounts may be redesignated as resident bank accounts. Only Fixed deposits in NRE/FCNR (B) accounts can run upto maturity.

Further he should report to all the Indian companies where returning Non-residents Indians have investments like (i) deposits (ii) shares (iii) debentures etc. that he is now a resident of India.

Rights of Returning Indians

Returning Indians are enjoying following facilities:-

1. He can transfer his NRE/FCNR (B) deposit balances to Resident Foreign Currency Account (RFC Account).


2. He can maintain and hold movable and immovable assets abroad.


3. He can maintain bank accounts abroad.


4. He can enjoy the concessions available in respect of free allowance and concessional duty on goods on account of transfer of residence.


5. He can enjoy the tax concessions by exercising option to be taxed @ 20 per cent.


6. He can continue to hold any general insurance policy issued by an insurer outside India when such person was resident outside India.

Provided further that where the premium due on a general insurance policy has been paid by making remittance from India, the policy holder shall repatriate to India through normal banking channels, the maturity proceeds or amount of any claim due on the policy, within a period of seven days from the receipt thereof.

Resident Foreign Currency (RFC) Account

Returning Indians are permitted to open, hold and maintain with an authorized dealer in India a Resident Foreign Currency (RFC) Account to keep their foreign currency assets. Assets held outside India at the time of return can be credited to such accounts. The funds in RFC account are free from all restrictions regarding utilization of foreign currency balances including any restriction on investment outside India.

General permission to hold foreign currency assets

In terms of sub-section 4 of Section (6) of the Foreign Exchange Management Act, 1999, a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

Continue to hold insurance policies taken from abroad.

Returning Non-Resident Indians are allowed to hold any insurance policy issued by an insurer abroad when such person was resident outside India provided premium on such policy is paid out of his currency account abroad or out of RFC account held with an authorized dealer in India. In such cases the maturity proceeds/ claims can be credited to the foreign currency account maintained abroad or to RFC account with an authorized bank in India.

PART B

RESIDENT FOREIGN CURRENCY (RFC) ACCOUNTS

Opening of RFC account by returning Indians.

Returning Indians who have permanently settled in India may open, hold and maintain with an authorized dealer in India a RFC account out of foreign exchange-

1. received as pension or any other superannuation or other monetary benefits from his employer outside India; or


2. realized on conversion of the foreign assets including foreign security or immovable property situated outside India if such currency, security or
   property was acquired, held or owned by such person when he was resident outside India or/and repatriated to India; or


3. received or acquired as gift or inheritance from a person resident outside India and proceeds have been repatriated to India.


4. acquired or received before the 8th day of July 1947 or any income arising or accruing thereon which is held outside India by any person in pursuance of a general or special permission granted by the Reserve Bank.
5. held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person who had acquired the foreign exchange before the 8th day of July 1947 including any income arising therefrom.
6. received as the proceeds of life insurance policy claims/ maturity/ surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by the Insurance Regulatory and Development Authority.

Utilization of funds lying in RFC account.

The funds in a RFC are free from all restrictions regarding utilization of foreign currency balances including any restrictions on investment in any form, by whatever name called, outside India.

Types of Account

An RFC account may be opened in the form of current or savings or term deposit account by an individual.

Operation of the Account

RFC Account can be opened and maintained singly or jointly.

Remittance after the a/c holder's death by a nominee resident outside India.

Reserve Bank has given general permission to authorized dealer to allow a nominee being a person resident outside India to remit funds to the extent of share or entitlement from the account of the deceased account holder.

Remittance after the a/c holder's nominee resident in India.

A nominee being a person resident in India, who is desirous of remitting funds outside India out of his share for meeting the liabilities abroad of the deceased, may apply to the Reserve Bank for such remittances.