RBI changes rule for resident Indians to give gift to NRI, NRO

Business

oi-Shoaib

By Shoaib Md

Published: Monday, September 19, 2011, 8:57 [IST]

The central bank of India, i.e. Reserve Bank of India regularly referred to as RBI, made announcement relaxing the 'Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000'. This change would benefit resident and non-resident Indians.

The central bank has increased the limit on transfer by way gift from resident Indians to non-residents.

Then earlier rule was that a resident Indian cannot give out gift in cash or securities having combined value of more than $25,000 in a financial year. Now this limit has been increased to $50,000 in a financial year.

If the amount is more than that of $50,000 then the person resident who would want to transfer more will require a prior approval of the RBI.

The RBI also has given permission to include the non-resident close relative as a joint bank account holder in their resident bank accounts. But such close non-resident Indians will not be eligible to operate the account during life-time of the resident Indian, added the RBI.

In the notification the central bank also stated that the non-resident Indian can open NRE/FCNR(B) account with their resident close relative. It said, “The resident, close relative should be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/PIO account holder."

RBI also decided that resident individuals will be permitted to include resident close relative as a joint holder in their EEFC (Exchange Earners Foreign Currency) or RFC(Resident Foreign Currency) bank.

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