RBI Cuts FCNR(B) Deadline to August 31: NRI Guide

Non-Resident Indians (NRIs) and People of Indian Origin (PIO) can hold FCNR(B) accounts jointly with eligible resident relatives, but the arrangement comes with specific restrictions. According to reports from Business Standard, MINT, and Zee News, the permitted relatives include members of a Hindu Undivided Family, husband and wife, 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). Certain relationships within a Hindu Undivided Family can also qualify. Banks may require documents to establish identity, residential status, and relationship between account holders, and NRIs cannot add any resident individual simply for convenience - the person must fall within prescribed relative categories. As per IDFC FIRST Bank, NRIs can open joint accounts with other NRIs as well as with resident Indians, but when a resident is added as a joint holder, the account must be operated on a 'Former or Survivor' basis, and only one resident Indian can be included as a joint account holder.

When an FCNR(B) deposit is held jointly with an eligible resident relative, it must operate on a 'Former or Survivor' basis, with the NRI or PIO as the first holder. As reported by Business Standard, MINT, and Zee News, this means the resident relative does not get the same independent operating rights available under mandates such as 'Either or Survivor'. The structure is primarily designed to provide continuity and convenience, and rules differ when all joint holders are NRIs, with banks potentially permitting a maximum of four NRI holders and providing different operating mandates subject to applicable regulations. According to SBI, NRIs and OCIs can open and maintain not only FCNR(B) accounts but also Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts jointly with eligible resident relatives, with the resident relative added as a joint holder on a 'Former or Survivor' basis. The account holder must be the primary holder of the joint account, and only one resident Indian can be the joint account holder.

FCNR(B) deposits can be funded through foreign currency remittances from overseas, transfers from other FCNR(B) accounts, or transfers from NRE accounts, as reported by SBI and Zee News. The State Bank of India website states that funds deposited in the account can be by way of fresh remittance from overseas or transfer from other NRE/FCNR(B) account or NRO account, subject to applicable limits. A Non-Resident (External) account converts foreign currency into Indian currency based on existing exchange rates to park savings in India, whereas an FCNR(B) maintains the deposit in foreign currency. The account holders are allowed to fund the deposits in two ways, providing flexibility for NRIs to manage their foreign-currency savings in India while maintaining the original currency structure.

FCNR(B) deposits offer significant tax advantages for eligible NRIs, with interest earned exempt from income tax in India subject to applicable conditions. According to Business Standard, MINT, and Zee News, the deposits can be funded through foreign-currency remittances, transfers from another FCNR(B) account, or transfers from an NRE account. The foreign-currency structure allows NRIs to maintain savings in currencies such as US dollars, pounds, or euros without immediate conversion to rupees, though currency risk remains as exchange-rate movements can affect value when funds are eventually converted. One of the key benefits of an FCNR(B) deposit is its tax and repatriation treatment, with both the principal amount and the interest earned on an FCNR(B) deposit being exempt from income tax in India under current guidelines. The tax exemption remains unchanged regardless of the revised deadline, making FCNR(B) deposits a preferred parking option for NRI savings alongside the currency-risk protection they offer.