Bank accounts of Foreign Nationals on employment in India

The foreign nationals employed in India are permitted to open and maintain domestic (Resident Rupee Accounts) accounts like SB, Current Account, or Term Deposits with the authorized dealer banks in India. The accounts of foreign companies in India can be maintained only in current accounts. Such companies are allowed to keep their surplus money in short-term deposits with a maturity period not exceeding three months.

KYC formalities:

The banks in India open and maintain any accounts with them only after completion of KYC (Know Your Customer) formalities like verification of identity proof and address proof of the person along with his photographs. The proof of identity and address of the foreign nationals in their home country is verified through his/her valid passport (and re-entry permit if that is required) with appropriate visa and immigration endorsement. The applicant must produce proof of his/her employment contract or engagement by the company/firm/organisation in India. The continuation of the account beyond 6 months requires RBI’s approval. However, the Pakistani nationals will require prior approval from RBI before opening the bank account in India. Bangladesh Nationals shall have a valid visa and residential permit issued by the Foreigner Registration Office (FRO) / Foreigner Regional Registration Office (FRRO) concerned to open the account.

Apart from completing above mentioned KYC formalities, foreign nationals other than diplomats attached to Foreign Embassies, Legations, Consulates, and Trade Representations and other foreign Government officials, in India and (ii) officials of the United Nations Organisations and its subsidiary/affiliate bodies, should fill in declaration form QA 22 and submit the same to the bank for treatment of their account as a resident account. (Click form QA22 for more details). Foreign nationals of non-Indian origin permanently resident in India or foreign nationals of Indian origin are also not required to submit QA 22 form for opening the resident account in India.

Permission to remit funds abroad for family maintenance:

Foreign nationals are permitted to make recurring remittances to their family members abroad for family maintenance through the funds available in their resident account in India. Such transfers are restricted to 75% of a person’s net salary (after tax and other mandatory deductions) which can be verified by the bank from verification of employment Visa. However, in exceptional cases, on the request of the account holder, the concerned AD bank may allow a transfer over 75% of the net salary provided the account holder is getting perquisites like free housing, conveyance, medical facilities, etc. The outward remittance is allowed only to the family members (spouse, children etc.) of the account holder and they must be resident outside India. A declaration should be submitted by the account holder in form A-2 every time he/she makes a remittance outside India. The authorised dealer bank also needs to certify on the reverse of the A2 form that the remittances made by the applicant during the month have not exceeded net salary.

Repatriation while leaving India:

Foreign nationals who live in India on employment can convert their Domestic account to an NRO account while leaving India. The balance available in the NRO account will be converted into foreign currency and paid to the account holder as per the extant guidelines of RBI.

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