The ultimate guide for NRIs and Indian residents for opening a joint account in India

The Non-Residents Indians (NRI) are significant players that help boost the country’s global image, expanding its culture beyond national boundaries. They play a pivotal role as economic accelerators by way of inward remittances to their family and relatives back home. This not only helps bolster the family's economic status but also aids in prospering the nation’s economy by increasing the foreign exchange reserves of the country.

Despite being major contributors to the country’s economic growth, NRIs previously struggled to lend financial support to their families due to the limited and complicated remittance structure. As per the previous mandate of the RBI, NRIs were not even permitted to open a joint account with Indian residents, making it extremely difficult for them to extend financial support to their family members in the home country.

To ease the banking struggles faced by NRIs, RBI made regulatory changes in 2011 which allowed NRIs to open joint accounts with Indian residents. This revolutionary solution meant that the said joint account would be treated as a resident account, subjected to similar regulations and not an NRE/NRO account.


Understanding NRI joint account with Indian Resident
NRIs since 2011, have the option of opening an “either-or-survivor” bank account which is a suitable option as both the NRI and resident Indian can operate this account independently when either of them wants to use it. Hence, it is essential to note that NRIs can only hold resident savings accounts as joint holders with Indian residents and under no circumstance can NRIs be single holders of the resident account.

As per the FEMA Regulations, 2016, NRIs can open an NRO joint account with a resident Indian on a “former or survivor” basis, subject to the fulfilment of the stated conditions. Since such accounts are based on “former or survivor”, the former (NRI) alone can operate the account but in case the former expires, the survivor (resident Indian) is eligible to control the account. For instance, Rajiv, a UK-based NRI, holds a joint account with his daughter who is a resident Indian, on a ‘former or survivor’ basis. In case of an unfortunate event, his daughter can operate the account.

Important Guidelines for the opening of NRI- Joint Resident Savings account
A joint account can be held by an NRI with his/her resident close relative which can include parents, siblings, spouse, siblings’ spouse, children, grandparents, and spouses of grandchildren. For such accounts, the resident Indian remains the primary holder and the NRI is considered the secondary account holder. Having said that, the NRI can be the joint holder of more than one savings account with resident bank account holders.

Documents and formalities
One must fill out the account opening form available at banks and then submit the required documents which include ID, address proof, PAN and Aadhaar or Form 60 (in the absence of PAN). An NRI must also provide a copy of their passport with a stamped visa proving their NRI status and exhibiting a foreign address proof.

Fund Related
The banks will ask for a signed declaration from the NRI account holder stating that the NRI will not use the cash in violation of the Foreign Exchange Management Act (FEMA) and will be responsible for any repercussions. Cash, cheque, instruments, cards, remittances or any other proceeds belonging to the NRI holder will not be eligible for credit to this account.

Though, the NRI holder can use the funds on behalf of the resident holder to make domestic payments but the funds in this account can’t be transferred outside India, nor can be sent as a gift and fund transfer to alternate NRI accounts like NRO and NRE is not allowed.

Significant specifications for holding a NRO account
Since NRIs are not allowed to hold resident savings accounts and can only do this jointly with resident Indians, it is mandatory that NRIs should intimate the bank to convert the resident account to NRO account in case they become the survivors of such accounts. In case of failure to make the conversion, continuing with the same resident status is illegal and the holder is bound to pay a penalty upto 3 times the amount involved in it.

Furthermore, incase of an NRO joint account, it is important to state who is the real owner of the funds since the interest incurred on an NRO account is taxable in India. 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.

Bottomline
With the introduction of joint account opening facilities, NRIs can send money to their joint resident accounts separately from their bank account, making it easy for them to keep records. NRI joint accounts are the key to unlocking a safe and seamless transaction experience with the assured guarantee that their family in India is financially secure.