RBI Guidelines allow Non-Resident Indians (NRIs) to open the NRE accounts, NRO accounts, and FCNR (B) accounts. Such accounts may be held singly or in joint name. However, the guidelines also impose certain restrictions on joint ownership in different NRI accounts. The provisions applicable to operate a joint account in different NRI accounts are as below:
1. NRE Account – It stands for Non-Resident (External) account, which can be opened as a savings account or deposit account. Such accounts can accept transfers in foreign currency only. Free repatriability of funds is available in respect of balance available in such funds. However, such accounts can be held jointly only with another NRI and can’t be held in joint operations with resident Indians. In case the status of joint holder changes at a later date from non-resident to a resident, such a joint owner would be required to be replaced with another eligible individual or the name be removed from the account.
2. NRO Account – It stands for Non-Resident (Ordinary) account. Such accounts provide flexibility to an NRI individual to receive remittances in foreign currency as well as the Indian Rupees. While these accounts are flexible to be funded even through rupee transfers, the account balance in such accounts is subject to repatriation restrictions. While the interest is freely repatriable, the principal amount is subject to repatriation restrictions as per the FEMA guidelines. NRO accounts are the most flexible for operating a joint NRI account, as one can hold such an account with a resident Indian or another NRI.
3. FCNR (B) Account – It stands for Foreign Currency Non-Resident (Bank) Account. Such accounts can only be operated as deposit accounts and can be denominated in specified foreign currencies. Such accounts are similar to NRE accounts in terms of repatriation of funds and joint operations. As such, FCNR (B) deposits can be opened jointly with another NRI only and cannot be held jointly with resident Indians.
Advantages of Joint NRI Accounts
Here are advantages of having a joint NRI account:
1. Availability of Funds to Close Relatives – Regulations allow the flexibility in NRO accounts to be operated in joint ownership with a resident Indian, which adds a significant comfort for the accountholders. While one may be living outside the country, he/ she can easily remit funds from abroad into the NRO account. Such funds can be accessed seamlessly by the joint holders, which can be NRI’s close relatives, viz. parents, siblings, spouse, etc. living in India. When the account is in joint name, and the operating instructions are ‘either or survivor’, the physical presence of the NRI account holder cannot be insisted, and the joint holder in India can withdraw the funds without any hassles.
2. Operational Advantages – A bank account may require several operational procedures at various points in time, including KYC, requesting for cheque book, account statement request, changing account status to active from dormancy, etc. The joint holder in India can always take care of all such procedural requirements at ease, without bothering the NRI account holder. Further, the access to joint holders can also be restricted, as one can instruct the bank to allow specific banking activities only through the specified account holder or in the presence of two or more joint holders.
3. Implicit Nomination of the Account enabling Access of Funds – When one has a joint account in the bank, any unfortunate event leading to the demise of one of the joint holders leads to the access of funds by the other account holders. As such, it acts as an implicit nomination of the account to the joint account holders. In the absence of any nomination, claiming the account balance as legal heir can be a complicated legal procedure.
Having joint NRE and NRO accounts adds additional operational convenience to the banking experience for the Non-Resident Indians. As such, one can consider operating the NRI bank accounts jointly as allowed by the RBI regulations for respective account categories.