NRO Account – Joint holding with residents
FEDAI has issued guidelines regarding joint holding in NRO accounts with residents. The guidelines have been issued by FEDAI based on clarifications sought from RBI. The FEDAI guidelines are given as under:
Joint holding with residents Reference para 7 of schedule 3 of Reserve Bank of India notification number FEMA 5 (R) dated 1st April’2016 which states “The account may be held jointly with resident on Former or Survivor basis”.
New guidelines were implemented w.e.f. 1st April while banks continued to have legacy accounts opened before that date which were held on “Either or Survivor” basis with residents. FEDAI sought guidance from RBI on status of such accounts.
All fresh NRO accounts should be opened with this mandate only. As regard existing accounts where “Either or Survivor” facility was provided, no fresh operations shall be allowed in the account before changing the mandate to “Former or Survivor” basis.
FEDAI approached RBI on 8th August, 2016 suggesting that suitable notice and time be given to member banks to inform their clients about change in guidelines requesting account holder to make necessary changes in mode of operations to avoid inconvenience to depositors.
RBI advised that the Authorised Dealers banks may provide their NRI customers one month of notice time for changing the status of their NRO accounts from “either or survivor”, to former or survivor, after which the account shall be automatically converted to single person’s account till the customer approaches its AD bank for changing the status to “former or survivor”.