15 Important Recent Changes affecting NRIs by RBI and Indian Government

RBI and Indian Government Agencies have made a lot of changes affecting NRIs and NRI Investments in last 8 months. I have selected 15 and have summarized them in the following table for easy understanding.

15 Important Changes affecting NRIs by RBI and Indian Government
#	Date	Topic		Detail	Effect / Benefit
Bank Accounts
1	10-May-12		EEFC Account	50% of balance and 50% of future credit to be converted into Rupees within 15 days	Conversion may reduce / stop further Rupee depreciation
2	7-May-12		NRO, NRE Account	Transfer from NRO to NRE account allowed	Save cost, Convert your taxable return into TAX FREE return, Limit for transfer from NRO to NRE but NO Limit for conversion out of NRE (see #8 for more)
3	4-May-12		FCNR Accounts	Interest rate increased upto LIBOR + 3% in FD in $, £, €, ¥, A$, C$; *e.g. Interest on 5 Yr FD in A$ is 7.09%*	FCNR deposit Rates increased by upto 1.75%. TAX FREE, 100% RISK FREE(Not even currency risk) FULLY Repatriable, No PAN, No TDS, No ITR
4	27-Apr-12		Intra bank account Transfer	Transfer of Account from one branch to another branch made easy	Save time, procedures and cost, if any
5	20-Apr-12		Bank Accounts –MICR & IFSC Codes	MICR and IFSC codes to be printed on Passbook/Statement of Accounts	Convenience as codes will be available and visible on front page
6	17-Apr-12		Interest Rate	RBI reduced interest rate by 0.50%	More liquidity in system could drive growth
7	21-Mar-12		NRE, FCNR Account – Loan Proceeds	Repayment of Loan by Residents to NRIs allowed to be credited to the NRE/FCNR account	Convenience, save time and cost, easy repatriation
8	19-Dec-11		NRE Account	Deregulation of NRE Bank FD interest rates	Rate increased from 3.5% to 9.5% TAX FREE, FULLY Repatriable, No PAN, No TDS, No ITR, No RISK except currency
9	25-Oct-11		Savings Bank Account	Deregulation of Savings bank interest	Rate increased from 4% to upto 7%
10	15-Sep-11		NRE, FCNR, EEFC, RFC Account	Resident close relative allowed to be a Joint Account holder	Convenience and ease of use, quick and easy transfer on death
Investments and Other Transactions
11	8-May-12		Budget 2012 proposals changed or withdrawn	GAAR deferred; 1% TDS proposed on transfer of immovable property and levy proposed on precious metal Jewellery withdrawn; onus of proof with Income Tax department.	Less compliance requirement, positive steps for attracting foreign investments into India
12	8-Apr-12		Permanent Account Number (PAN)	New Form 49AA became operational for Non-Indian citizens	Require 2 photos, 3 signs, and KYC details including Taxpayer ID in country of residence (e.g. For US residents, SSN/TIN)
13	1-Jan-12		Know your Customer (KYC)	Form Revised. One Common Form for KYC for investing in Indian stocks, bonds and mutual funds	Convenience – One form for mutual fund and brokerage accounts
14	13-Jan-12		Qualified Foreign Investor (QFI)	Scheme introduced for QFI to invest in Indian equity and equity mutual funds	Expected Increased investments in India (Only NRIs and FIIs allowed until now; scheme not yet operational)
15	2-Dec-11		Validity of Cheques (Checks)	Checks dated before April 1, 2012 – valid for 6 months; Checks dated on or after April 1, 2012 – valid for 3 months	Validity reduced from 6 to 3 months so deposit/ encash checks early; increases money rotation
	1-Dec-113-Apr-12		PPF Account (not for NRI)	PPF investment ceiling increased from 70,000 to 100,000 and interest@ 8.8% p.a. Tax free from April 1, 2012	Higher tax free secured return for residents

Currently, India is very much in need of foreign exchange. Indian Government, including RBI, SEBI, AMFI, Finance Ministry etc. have relaxed terms and are offering attractive secured returns to NRIs to attract foreign investment and to stabilize Rupee (INR). As a result, NRIs earn higher secured return than Residents. NRIs earn 9.5% Tax Free Return from Bank FD compared to 9.5% Taxable Return for Residents.

With exchange rate at ALL TIME HIGH of Rs. 54.70/$, You should not wait. I agree, it could go to 56-57/$ but what if it goes back to 50/$? 54.70 is way better rate than 48.60 about 3 months ago (on Feb 4, 2012). You should realize the opportunity and take benefit of relaxed terms, higher currency rates and better investment returns. It will serve mutual benefit to you (increasing your return) and to India (getting much needed foreign exchange).