DIFFERENCE BETWEEN PIO AND OCI CARD

A PIO (Person of Indian Origin) card allows for visa-free travel to and from India. However, a PIO card is only valid for 15 years. Also, if your stay in India is going to exceed 180 days on any single visit you will need to register within 30 days of the expiry of 180 days with the concerned Foreigners Regional Registration Officer/Foreigners Registration Officer or local Police Authorities.  

Unlike a PIO, an OCI card has lifelong visa-free travel and does not require the holder to register with any office regardless of the length of their stay.  

A person is eligible for a PIO/OCI Card if they at any time held an Indian Passport or either of his/her parents, grandparents or great grandparents was born in and are/were permanent residents’ in India as defined in the Government of India Act, 1935 and other territories that became part of India thereafter provided neither was at any time a citizen of Bangladesh, Pakistan, Sri Lanka or other countries which may be specified by the Central Government from time to time. 

The PIO scheme is broad-based and includes up to four generations and also the foreign spouse of a citizen of India or a PIO/OCI card holder. OCI states that the spouse of the eligible person can apply for OCI only if they are eligible in their own capacity. Foreign Nationals, who are not eligible for an OCI, but married to someone who is eligible for an OCI, still cannot be granted an OCI. 

For other details / queries, drop a mail at prashant.singh@sbi.co.in

 

STATE BANK AND CTS-2010 CHEQUES

As per the latest instructions from Reserve Bank of India, w.e.f 01.04.2013 only CTS-2010 Features enabled cheques can be used and paid by the Banks (these instructions are applicable to all the Banks operating in India)

In light of the above, it is advisable to verify following features in your existing Cheque Book.

i)                         All CTS-2010 enabled cheques carry standardized watermark called “CTS-INDIA” which can be seen when you held Cheque against light.

ii)                       Bank Logo will be printed in ultra-violet ink. The logo will be captured or visible in ultra violet enabled scanners.

iii)                      All cheques should be issued with the account number field pre-printed.

iv)                     “VOID” Pantograph i.e. if Cheque is copied or scanned then “VOID” word will appear on photocopy or scanned image.

v)                     At Cheque tear of portion, Printer’s name along with printing “CTS-2010”, establishing CTS-2010 compliance. ( Most Important)

vi)                     Rupee Symbol is pre-printed

If your existing Cheque book is not having any or one of the above features then that Cheque is non CTS-2010 enable Cheque and can not be used after 31.03.2013

State bank is planning to issue CTS-2010 enabled cheques to all its customers by which will be delivered to customers registered address, however State Bank customers can also get CTS-2010 enabled cheques by using Internet banking facility through which they can apply fresh Cheque book and also instruct for delivery at their desired address

If Customer is not able to issue Cheque book by Internet Banking Facility then they can approach to their home Branch and home branch will issue the same from their end

For other details / queries, drop a mail at prashant.singh@sbi.co.in

 

WARNING: PORTFOLIO MANAGEMENT, WEALTH MANAGEMENT AND ASSET MANAGEMENT SERVICES

 

Dear Corporate honchos, high net-worth individuals and Non Resident Indians (NRIs) – who are too busy, too important, too aged or too distracted to keep track of their hard-earned money, and therefore entrust this job to  Bank’s portfolio management, wealth management and asset management services. Have you signed blank forms and letters giving Bank blanket permissions to trade on your behalf, pay insurance premiums, housing mortgages, bills etc? Has your friendly neighbourhood  Bank, through its relationship manager, convinced you that as a “Premier customer”, the best way to grow your wealth is by giving it the absolute discretionary power to buy, sell and hold instruments such as ULIPs and SIPs on your behalf? Have you given a power of attorney that enables bank branches to take major decisions on your behalf, open bank accounts etc?

And last but not least, does your relationship manager give you figures and vague reassurances over the phone, but avoid putting them in writing — all in the name of “personalized relationship management”?

If you answered yes to these questions, then maybe you should panic. Call your chartered accountant immediately and get him to study whether your funds have grown or remained steady over the past few years… or whether they have greatly diminished.

At various stages of the relationship, smooth-talking relationship managers get these high net-worth individuals (HNWIs) and NRIs to sign disclaimer, waivers and powers of attorney that give Bank’s various branches uncontrolled access to their funds, and helps impose unfair and illegal terms and practices on such individuals. This is done ostensibly to ‘reduce red tape’ and ‘to better manage the portfolio’. With the clean chit now in hand, Bank methodically builds a situation where the expatriate or HNWI customers start complying with unreasonable and dubious demands for fund remittance into the account. Opting for online bill payment and having a credit card makes this situation even more complicated, and gives the bank a massive leverage for upsetting the customer’s daily life. Busy people are so entangled in this relationship with the bank that they fear a messy financial disruption. Expats are often worried about their family members in India for whom these funds were being transferred. And so, they comply.

Aged and ailing people, expats with a busy flying schedule or people going through a professional/personal crisis simply have no energy to seriously take up this fight. So they file complaints to the bank’s higher ups, and receive vague assurances, often in exchange for signatures on waivers, disclaimers and more blanket permissions of the sort that caused their problems in the first place! The mechanisms for “dispute redressal” give customers a false sense of security for a few more months… And the bank’s stranglehold on the helpless customer grows stronger with each passing month, despite his knowledge that he is being sucked dry.

Expats are extremely vulnerable because of (a) the practical difficulties posed by time zones, market timings and office timings (b) different banking regulatory regimes and banking practices followed in India, USA, UK, UAE, Europe and Malaysia.

So ask immediately to your Bank to give you full details of your investments and start transferring funds from those investments where you are facing loses or not getting expecting returns to some safe avenues as suggested by various independent websites or credit agencies.

For other details / queries, drop a mail at prashant.singh@sbi.co.in

RUPEE LOAN AGAINST NRE DEPOSIT

During a recent development , RBI have removed the cap of INR 100 Lacs for Loan against NRE Deposit , there may be several reasons for RBI’s this step but NRI’s are always demanding this as this type of Loan is gaining popularity day by day.

Features and Benefits of this Loan is as under

i)                    As all of us aware that NRE Fixed Deposit should be prepared for a minimum period of one year and if you require funds before one year of then you have to forgo the interest portion , now at this time this loan will help you to ensure your liquidity without taking premature payment of your fixed deposits.

ii)                  Loans available to self as well as third party individuals , so if you wantg to lend some money to any of your relative and at the same time you want separate accounting  then you can use it and tell your relative to repay this loan , by doing this your relative will get money and you need not to break your Tax Free NRE FD’s

iii)                 Loans available up to 90% of the principal amount of the deposits without any upper ceiling.

iv)                You can take overdraft facility so that whenever you require, you can withdraw money. you can also take it as Demand loan in which the entire loan amount will be credited to your NRO account

v)                Repayment to be made either by adjustment of the Fixed Deposit or by fresh remittances from outside India through normal banking channels. Loan can also be repaid out of the funds in the NRO account of the borrower. In case of loans to third parties, the same can be repaid out of the local rupee account of the borrower.

vi)              Interest will be charged at 0.50% above the rate of Fixed deposit against which you are taking loan and this interest will be charged at daily reducing balance

So go ahead and utilise this facility

For other details / queries, drop a mail at prashant.singh@sbi.co.in

RESIDENT / NON RESIDENT / NOT ORDINARY RESIDENT

Basically residential status is determined for the Taxation purpose which also depends on the physical presence of the taxpayer in India in the course of the "previous year" which would be the twelve months from April 1 to March 31.

Now for more simplification we will assume as

Y => This Year and for other years we will use + / -

A person is said to be "resident" in India in any previous year if he -

(a) Is in India in that year (Y-1) for an aggregate period of 182 days or more; or

(b) having within the four years (Y-2 to Y-5) preceding that year been in India for a period of 365 days or more, is in India in that year (Y-1) for an aggregate period of 60 days or more.

However, as a special concession for Indian citizens and foreign citizens of Indian origin, the period of 60 days referred to in Clause (b) above, will be extended to 182 days in two cases:

(i)                  Where an Indian citizen leaves India in any year for employment outside India; and

(ii)                Where an Indian citizen or a foreign citizen of Indian origin (NRI), who is outside India, comes on a visit to India.

In the above context, an individual visiting India several times during the relevant "previous year" (Y-1) should note that judicial authorities in India have held that both the days of entry and exit are counted while calculating the number of days stay in India, irrespective of however short the time spent in India on those two days may be.

A "non-resident" is merely defined as a person who is not a "resident" i.e. one who does not satisfy either of the two prescribed tests of residence.

An individual, who is defined as Resident in a given financial year is said to be "not ordinarily resident" in any previous year if he has been a non-resident in India 9 out of the 10 preceding previous years or he has during the 7 preceding previous years been in India for a period of, or periods amounting in all to, 729 days or less.

For other details / queries, drop a mail at prashant.singh@sbi.co.in

INOPERATIVE OR DORMANT ACCOUNT

Inoperative / dormant is very important word for NRE account holders as they usually open so many accounts and leave their funds but at the time of withdrawal of funds they came across with the said words

Why account becomes Inoperative

 
If no transaction — credit or debit other than crediting of periodic interest or debiting of service charges — takes place in your savings account for more than 2 years the account becomes inoperative. Once an account turns inoperative, you can’t perform several operations. In case of an inoperative account you cannot request that a Cheque book be issued, the address be changed, the signature be modified, a joint holder be added or deleted, or an ATM/debit card be renewed. You will also not be able to withdraw money from an ATM or carry out any transaction either through internet banking or a branch of the bank.
However, even after your account turns inoperative, interest is still credited to your saving account regularly.

How to reactivate an account

To reactivate an inactive account you need to conduct a transaction by Cheque or ATM. In case you have other active accounts, you could send the bank a secure message from your Personal Internet Banking ID instructing it to debit Re 1 from this account to another.

To reactivate a dormant account, submit a formal application to the bank stating the reason for your absence, and provide a photo identity proof. Your signature will be verified by the authorized bank personnel. The bank may even charge you a small fee for reactivating your account.
To nip this problem in the bud, keep using your account before it turns inactive or dormant. Carry out a transaction once in a while in all your accounts if you want to escape bearing the penalty or having to run to the branch to reactivate the account. At least once a year, carry out a transaction: withdraw cash, transfer funds through any of the banking channels, or make a Cheque payment to ensure that your account remains active.

Important: if you have not used your accounts in last 6-8 months then before issuing any Cheque, contact your Branch to know the status of the account as it may happen that your Cheque may be returned due to Inoperative / Dormant Status of the account

For other details / queries, drop a mail at prashant.singh@sbi.co.in

FUNDS REMITTANCE DIRECTLY TO RESIDENTS ACCOUNT: GIFT AND WEALTH TAX

Recently during the discussion with an NRI , I observed a normal tendency of Short Term NRI’s that they don’t open NRE account to remit funds to india and they are sending funds directly to their relatives / friends accounts and from these accounts they do further investment in real-estate , stock market , fixed deposits etc.

Now it looks normal that it’s your money that you are sending funds to your Indian friends / relatives but this time you forgot about 2 major tax implications on this act or in other words we can say that 2 major tax benefits if your route these transactions from your NRE accounts , these are Gift Tax & Wealth Tax

Gift Tax says that the receiver has to pay tax for receiving any gift valued at Rs.50,000 and more, there are exemptions for gifts received from certain people and the major exemption is that gift received from close / blood relative is exempted from gift tax

All the countries have made their gift tax rules for e.g. If a US person receives a gift or inheritance from a non US person (or people) in total of over $100,000 in a given calendar year, an information form needs to be filed with the IRS. The gift or inheritance to an individual is excluded from gross income on the tax return. The form to be filed is not a tax return because there is no tax on gifts from foreign persons. However, this informational form must be filed to avoid strict penalties.

Now wealth tax i.e. all resident Indians are required to pay wealth tax and file a wealth tax return if their net wealth from assets exceeds Rs 30 lacs.
The Assets in this case include land, property, jewellery, cars, aircrafts, yachts and cash in excess of Rs 50,000. For Resident Indians (Resident Ordinary Residents - ROR), wealth tax is payable on all these assets, irrespective of whether they are located in India or abroad. For Non Resident Indians (NRIs), wealth tax is payable only on those assets that are located in India.

Now when you are sending money to India in your friends / relatives account then knowingly or unknowingly you are raising their Tax liabilities at the same time when you require back that money then again that will be subjected to taxes so be straight and always route all your fund through your NRE account and always keep your excess funds in NRE account as

An NRI can gift to his/her parents in India from their NRE account without their parents suffering any tax.

Likewise, balances held in such accounts are exempt from Wealth-tax in terms of Section 6(ii) of Wealth-tax Act, 1957.

For other details / queries, drop a mail at prashant.singh@sbi.co.in

RESIDENT ACCOUNTS TO NRO ACCOUNT

As per instructions of Reserve Bank of India (RBI) contained in RBI Circular no. RBI/2012-13/75 DBOD No.Dir.BC.1/13.03.00/2012-13 dated 02.07.2012 (copy available at RBI Website), when a resident becomes a Non Resident Indian (NRI), his/ her existing normal resident accounts should be converted in NRO Account.

 The said stipulation is applicable to all Banks operating in India as well as all type of accounts i.e. Savings / Current / Fixed Deposits etc, so being a statutory requirement we advise you to approach your Bank for conversion of your Normal Accounts to NRO Account, for this your bank may ask for copies of Passport & Visa / Green Card / OCI Card etc. Conversion of Normal Account to NRO Account is a simple process and will not change your account no. / ATM Card / Internet Banking Pass book etc

 Details and other operative instructions are available in the said RBI Circular

For other details / queries, drop a mail at prashant.singh@sbi.co.in

NRE RECURRING DEPOSIT BENEFITS

Recurring deposit is very popular in salaried class resident Indians, but I personally feel that this is the best way to save for future planning’s as it locks your present rate of interest for future savings , say if a persons invests in fixed deposit today he will get today’s rate of interest and after 6 month if he will again deposit in FD then he will be getting the then prevailing rate of interest , but in RD if you opt for a period of 10 years then each and every instalment will get the benefit of today’s rate of interest

 Maturity values for different interest rates and period

 If a person starts a NRE RD of Rs. 10000.00 and his bank offers interest rate at 8.50% then maturity value for different period will be as under

i)        For 12 months (1 year)     =       1.24 lacs (approx)

ii)       For 36 months (3 year)     =       4.08 lacs (approx)

iii)      For 60 months (5 year)     =       7.44 lacs (approx)

iv)      For 120 months (10 year)  =       18.81 lacs (approx)

 

Normally Banks are charging penalty @ Rs.1.5 to Rs.2.00 per Rs.100 per month for delayed payment of instalment

In case of premature withdrawal, banks are usually giving the interest 0.50% below the rate applicable for the period the deposit remains with the bank or 0.50% below the contractual rate which ever is lower

If you break this deposit before 1 year, you might not get any interest

 

For other details / queries, drop a mail at prashant.singh@sbi.co.in

NEW CURRENCIES FOR FCNR/FCNB DEPOSIT

Reserve Bank of India has given permission to the banks for accepting FCNB deposits in several other currencies and now some Banks have started accepting deposits in Switzerland Franks (CHF), New Zealand Dollar(NZD), Swedish Kroner (SEK) ,Denmark Kroner (DKK) in addition to existing six currencies viz., USD, GBP, JPY, EUR, CAD, AUD

 for latest rate of interest visit respective Banks website 

For other details / queries, drop a mail at prashant.singh@sbi.co.in

TAXATION FOR NRI

Taxable Income (Indian Income)

Only the income which is earned, received or accrued in India is taxable here. Income which is earned outside the country, even if it is later remitted to India is non-taxable. The following are some examples of taxable income-

• Income earned from any property or transfer of property/capital asset in India.
• Dividend paid by an Indian company outside India is deemed to be accrued in India.
• Salary paid by the Indian Govt. to an Indian citizen for services rendered abroad is deemed to have accrued in India.
• Interest, royalty and dividends, professional fees paid by the Govt. of India, even if it is paid outside India.

Exempt Indian Income

• Interest on Non Resident External (NRE) A/c.
• Taxable Income up to the basic threshold limit specified for NRIs by Income Tax authorities. For the financial year 2012-2013, it is Rs. 2,00,000/-.
• Interest on notified securities or bonds.

Taxable Indian Income

• Short Term capital gains on investments in equity shares and mutual funds at flat 15 %.
• Long term capital gains at 20 %.
• Interest earned on Non Resident Ordinary (NRO) A/c.
• Special tax rates apply on dividends/interest and capital gains earned on units of mutual funds and shares purchased in foreign currency.

Filing Income Tax Returns

Filing of income tax returns becomes mandatory for a Non Resident Indian if his total taxable Indian income in a particular financial year exceeds the basic exemption limit. But if the NRI has earned short term or long term gains, filing returns is mandatory even if the amount is less than the exemption limit. It is advisable and more convenient for NRIs to obtain a digital signature and file their returns online.

Double Taxation Avoidance Agreement (DTAA)

The Double Taxation Avoidance Agreement is an agreement between India and certain foreign countries which states that if an NRI who is a resident of any of these specified foreign countries pays taxes on his income earned in the foreign country, then he or she is eligible for a lower rate of deduction of tax on income earned in India in that financial year. This lower tax help in encourage Non residents to invest in their country of origin.

For other details / queries, drop a mail at prashant.singh@sbi.co.in

NRE VS FCNR

Today when growth rate of India is moving downwards, confusion has been coming in NRI’s mind i.e. whether invest in Rupee Fixed Deposit or opt for foreign currency fixed deposits

I personally feel that in coming 2 years (or up to coming general elections) rupee will show weakness and after that it will again start improvement

In search of the solution of NRE Vs FCNR, I tried to illustrate the best and worst case scenario in both the case for this I have presumed that in best case rupee will come to 50 and in worst case it can go up to 58, so I will take these two figures in illustration. I am considering present rupee rate as 55, present NRE interest rate 8.5% and present FCNR rate 3.75%

 

Case –1 Investment in NRE

 Investment of $100

$100 = INR5500

Invest for 2 years @8.5% then maturity value = INR 6508

After 2 years

If Rupee performs well

Then rupee rate will be 50

Maturity value INR6508 reconverted to $ @ 50 = 6508/50 = $130 (approx)

In 2 years $100 will turn to $130 i.e. 15% yield

 

If Rupee performs worst

Then rupee rate will be 58

Maturity value INR6508 reconverted to $ @ 58 = 6508/58 = $112 (approx)

In 2 years $100 will turn to $112 i.e. 06% yield

 

Case –1         Investment in FCNR 

Investment of $100

$100 Invest for 2 years @3.75% then maturity value = $107.7

In 2 years $100 will turn to $107.7 i.e. 3.85% yield

 

So in the present circumstances investment in NRE is suggestable

For other details / queries, drop a mail at prashant.singh@sbi.co.in

NRI BANKING THROUGH EMAIL

Recently due to tech revolution it has been observed that peoples are feeling comfortable with IT platforms during their dealing with banks in which use of email for communication is most popular way to deal with the banks , here I suggest some do’s & don’ts while using email communication with the banks
 

Do’s

1                     Always send email to official ID of Bank / Branch available at Bank’s official website

2                    whenever you send any email to other than Bank / Branch ID then always mark CC to Branch / Bank official Id

3                    Whenever you require any Bank rule / charges details always ask your Bank to provide the same through email so that it can be used in future in case of dispute

4                    Always raise your complaint through email , in case you have directly talked to branch official then also send a mail quoting that communication

5                    Try to send regular emails to your Branch ( at least once in a month) , this will help your Branch to easily recognize you as NRI’s are not regular visitors of the Branch

6                    Whenever you get any message from your Branch regarding your account ,try to respond at the earliest otherwise Branch may stop your account which will result Cheque bounce events

 

 Don’ts

1                     never ask account balance through email, always make call to Bank / Branch officer

2                    never reveal your ID & Password in email messages even if Branch officer demand so

3                    never send any fund transfer instruction through email

4                    don’t use reply button , always start new message and type email id

5                    never open any attachment before 100% confirmation of genuineness of email 

 

For other details / queries, drop a mail at prashant.singh@sbi.co.in

FUND TRANSFER THROUGH SWIFT

Normally funds can be transferred electronically through undernoted channels

 

1.                   General Transfer > Fund Transfer within the Bank

2.                  RTGS / NEFT > Fund Transfer within the country between Bank

3.                  SWIFT > Fund transfer in all over world

 

SWIFT is one of the oldest and trusted mode of fund transfer between Banks of different countries some features of SWIFT is;

i.                    Transfer takes normally 2 to 7 days

ii.                 Most legal way for international fund transfer

iii.               This is the only way through which funds can be send to any country

iv.                Transfer cost is comparatively high ( normally $15 to $75)

 

Fund transfer diagram

Remitters account > remitters Banks account in same country > remitters banks account in receiving country > remitters correspondents bank account in receiving country > receivers bank account in receiving country > receivers account in receiving country

 

How transfer takes place

Remitters Bank initiates coded financial message for receivers Bank via SWIFT and at the same time takes funds from remitters account and credit the same to Nostro account of receivers Bank, some time it may happen that the remitting Bank sends Financial message to receiving Bank but delayed actual credit of funds in nostro account which result in delay of actual fund transfer

 

What are the requirements for transfer of funds?

User needs to know the SWIFT Code of receivers Bank Branch, Receivers Account no. , Name of Receiver as mentioned in receivers Bank Books and IFSC Code of receivers Bank Branch where receivers account is being maintained

Users need to visit his Bank and instruct his Bank to initiate SWIFT Transfer by giving above details; user should also inform his bank whether funds need to be converted in currency of receiver’s country or it should be kept as foreign currency

 

For other details / queries, drop a mail at prashant.singh@sbi.co.in

BENEFITS OF FCNR (B) DEPOSITS

India being a high inflation high growth country is capable for offering attractive interest rates for foreign currency deposits; this deposit is called FCNR (B) fixed deposits. Some of the benefits of FCNR (B) Deposit scheme are:-

Ø     Interest income tax-free in India

Ø     Freely Repatriable

Ø     Available for 1 – 5 years

Ø     No need to monitor exchange rate fluctuations

Ø     Available in 6 currencies viz USD, GBP, EURO, CAD, AUD, JPY

&

Ø   Above all

All major Banks are offering attractive interest rates on this deposit for eg State Bank interest rates on FCNR Deposits is USD: 3.79%; Euro: 4.05%; GBP: 4.06%; CAD: 4.64%; AUD: 6.55%; JPY 3.37% p.a.

Rate of interest is sole discretion of Banks and may change at any time

If you are existing account holder of Bank then this will take only one day for Banks to prepare this at the same time on maturity banks can repatriate the same within 24 hrs

If you are not having any account with any Indian bank then you require to complete KYC formalities for preparation of the same which can be done through post itself

For other details / queries, drop a mail at prashant.singh@sbi.co.in

WHERE TO OPEN NRI ACCOUNTS

Now these days all major banks are working on core banking platform which provides customers a flexibility to utilities banking services from any of its branches , at the same time banks are also providing Internet Banking , ATM Card facility and Cheque books through which you can do almost 90% of your  banking transactions without even visiting your parent branch

So in nutshell it can be said that Branch or Place is not that much important for opening of NRI accounts and you must open your bank account where you can reach directly to Relationship Executive or Branch Head through phone or mail

A simple way to check this, just visit to your desired bank’s website, search branch and drop a mail now if you receive reply of your mail within 24-36 hours in which the replier has given his mobile no or Land Line no. then you can move further for opening of account

But if you receive system generated reply along with a toll free no for help then be careful and think twice before opening of account

For other details / queries, drop a mail at prashant.singh@sbi.co.in