Can NRI open FCNR account with resident Indian relatives?

A Non-Resident Indian (NRI) seeking to invest in India through an FCNR (B) deposit may wonder if it is possible to open such an account jointly with a close relative residing in India. The possibility of forming a joint account is indeed available, subject to certain conditions.

According to the State Bank of India (SBI) website, an NRI can open an FCNR (B) account alongside a resident Indian relative, provided they meet specific criteria. This arrangement is useful for NRIs who wish to maintain their foreign currency deposit while having a family member involved in the account management process within India.

It is crucial to grasp the rules governing the joint ownership of an FCNR (B) account, as well as the operational mode that can be selected. The deposit can be held jointly with a resident Indian on a ‘Former or Survivor’ basis only.

The IDFC FIRST Bank clarifies that NRIs can establish joint accounts with both other NRIs and resident Indians. However, if a resident must be included as a joint account holder, the mode of operation must be set to ‘former or survivor’. Moreover, a maximum of one resident can be added as a joint account holder.

The SBI website also states that Non-resident Ordinary (NRO) and Non-resident External (NRE) accounts can be opened jointly with resident Indians, similar to the FCNR (B) account option.

NRIs and Persons of Indian origin (PIOs) have the opportunity to open joint accounts with resident Indians under various circumstances. The account types that allow joint ownership with resident Indians include NRO, NRE, and FCNR (B).

To qualify as an NRI’s resident relative, the individual must belong to one of the following categories: (i) a member of a Hindu Undivided Family, (ii) a husband and wife, or (iii) two individuals related in a manner as prescribed by the guidelines.

Specifically, the eligible categories for resident relatives include a father (including step-father), mother (including step-mother), son (including step-son), son’s wife, daughter, daughter’s husband, brother (including step-brother), and sister (including step-sister).

NRIs can fund their FCNR (B) accounts through two methods: Foreign Currency Remittances from overseas or funds transferred from any existing FCNR or NRE account held in any bank in India. Furthermore, it is important to note that the principal amount and interest earned on a FCNR deposit are exempted from income tax in India, and funds held in the deposit are fully and freely repatriable, both in principal and interest.