Joint FCNR (B) accounts for NRIs: Eligibility, mode of operations and key rules explained
Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) looking to park their foreign currency savings in India may consider opening a Foreign Currency Non-Resident Bank or FCNR(B) deposit. However, NRIs may also want to add a close family member living in India as a joint holder for easier management of the account. The key question, therefore, is whether an FCNR(B) account can be opened jointly with a resident Indian relative.
According to information available on the State Bank of India (SBI) website, NRIs are permitted to open and maintain FCNR(B) accounts jointly with eligible resident relatives, subject to certain conditions.
Mode of operation rules
The most important condition relates to the mode of operation. An NRI can hold an FCNR(B) deposit jointly with a resident relative only on a ‘Former or Survivor’ basis, with the NRI, Person of Indian Origin (PIO) or Overseas Citizen of India (OCI) being the first holder.
Before opening such an account, NRIs should therefore check whether the proposed joint holder qualifies as an eligible resident relative and ensure that the prescribed operating arrangement is followed.
According to IDFC FIRST Bank, NRIs can open joint accounts with other NRIs as well as with a resident Indian. However, when a resident is added as a joint holder, the account must be operated on a ‘Former or Survivor’ basis, and only one resident can be included as a joint account holder.
Joint FCNR(B) accounts can also be opened with other NRIs, with up to four joint holders permitted under certain modes of operation, including ‘Either or Survivor’, jointly, or in the case of a minor, through a guardian.
SBI also states that 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. In such cases, the resident relative can be added as a joint holder on a ‘Former or Survivor’ basis.
Eligibility for resident relatives
Under the rules outlined by SBI, eligible resident relatives include members of a Hindu Undivided Family, a husband and wife, and persons related in the prescribed manner.
The list of specified relatives includes:
- Father, including step-father
- Mother, including step-mother
- Son, including step-son
- Son’s wife
- Daughter
- Daughter’s husband
- Brother, including step-brother
- Sister, including step-sister
This means an NRI may be able to add an eligible close family member residing in India as a joint holder, provided the applicable conditions are met.
Funding methods and tax benefits
NRIs can generally fund an FCNR(B) deposit through foreign currency remittances received from overseas. Funds can also be transferred from another FCNR account or from an NRE account held with a bank in India.
One of the key benefits of an FCNR(B) deposit is its tax and repatriation treatment. Under current guidelines, both the principal amount and the interest earned on an FCNR(B) deposit are exempt from income tax in India.
In addition, the funds held in the deposit are fully and freely repatriable, meaning that both the principal and accrued interest can be transferred outside India, subject to applicable rules.
For NRIs, an FCNR(B) deposit can therefore offer a way to hold foreign currency savings in India while potentially allowing an eligible resident family member to be associated with the account for easier administration. However, the joint holding arrangement must follow the prescribed ‘Former or Survivor’ mode and other applicable banking conditions.
