NRO Account Operation via Power of Attorney Expanded
Current & verified — this is the latest version
Source: Reserve Bank of India · RBI/2006-2007/419 · issued 25 May 2007 · ~2 min read
Quick answerRBI now allows resident Power of Attorney holders to operate NRO accounts for local payments and remittance of current income (net of taxes), but prohibits repatriation of funds except to the account holder, gifts to residents, or transfers to other NRO accounts.
The rule, in the simplest words
A non-resident can give a Power of Attorney to a resident to manage their NRO account for local payments and remitting current income after taxes.
The resident Power of Attorney holder can make local rupee payments and send the non-resident's current income abroad after deducting taxes.
The resident Power of Attorney holder cannot send other funds abroad, make gifts to residents, or transfer funds to another NRO account except to the account holder.
Banks must update their NRO account rules to allow these Power of Attorney operations and ensure strict monitoring to prevent unauthorized transactions.
How it plays out — a real example
A forex & trade-finance officer in Mumbai, acting as a Power of Attorney holder for her non-resident uncle, can now use his NRO account to pay local bills and send his rental income abroad after taxes. She can also invest in eligible investments on his behalf, but must be careful not to repatriate other funds or make gifts to residents, which are not allowed under the new rules. This simplifies her uncle's financial management in India, while she ensures compliance with the RBI's regulations.
What changed
Previously, NRO accounts could only be opened jointly with residents. Now, a non-resident individual can grant a Power of Attorney to a resident to operate the account, subject to specific restrictions. The resident PoA holder can make local rupee payments and remit the account holder's current income abroad after tax, but cannot repatriate other funds, make gifts, or transfer to another NRO account.
What it means for you
Banks must update their NRO account operating instructions to allow PoA-based operations within the defined limits. This simplifies compliance for non-residents managing Indian finances through a trusted resident, but banks need to ensure strict monitoring to prevent unauthorized repatriation or transfers. The circular reinforces existing FEMA deposit regulations with this specific operational flexibility.
What you must do
Update internal NRO account policies to permit PoA operations as per the circular.
Train staff on the allowed and prohibited transactions under PoA for NRO accounts.
Implement monitoring mechanisms to ensure PoA holders do not repatriate funds except to the account holder or remit current income net of taxes.
Communicate the new facility to existing and prospective NRO account holders and their PoA holders.
Who it affects
AD Category-I banks, Authorised banks, Non-resident individual NRO account holders, Resident Power of Attorney holders, Bank compliance and operations teams
❓ Common questions
Can a resident PoA holder transfer funds from the NRO account to another NRO account?
No, the circular explicitly prohibits transfer of funds from the NRO account to another NRO account by the resident PoA holder.
What remittances are allowed by the resident PoA holder from the NRO account?
The PoA holder can remit outside India only the current income of the non-resident account holder, net of applicable taxes. No other repatriation is permitted.
Does this circular require any amendment to existing FEMA regulations?
Yes, the circular states that necessary amendments to the Foreign Exchange Management (Deposit) Regulations, 2000 are being notified separately.
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/419
A.
P. (DIR Series) Circular No. 64
May
25, 2007
To,
All
Category - I Authorised Dealer banks / Authorised banks
Madam
/ Sir,
Foreign
Exchange Management (Deposit) Regulations, 2000-
Operation
of NRO account by Power of Attorney Holder
Attention
of Authorised Dealer Category I (AD Category – I) banks and authorised banks (the
banks) is invited to paragraph No.7 of Schedule 3 to Notification
No. FEMA 5/2000-RB dated May 3, 2000 viz., Foreign Exchange Management (Deposit)
Regulations, 2000 (the Notification), as amended from time to time, in terms of
which a person resident outside India may open with an AD Category – I / authorised
bank, a Non-Resident Ordinary Rupee (NRO) account, jointly with residents.
2. As announced in the Annual
Policy Statement for the year 2007-08 [para 146(ii) (ii)], it has been decided
to extend the facility of operation of NRO account by Power of Attorney granted
in favour of a resident by the non-resident individual account holder. Accordingly,
the banks may allow operations on an NRO account in terms of such a Power of Attorney,
provided such operations are restricted to (i) all local payments in rupees including
payments for eligible investments subject to compliance with relevant regulations
made by the Reserve Bank; and (ii) remittance outside India of current income
in India of the non-resident individual account holder, net of applicable taxes.
3.
The resident Power of Attorney holder is not permitted to repatriate outside India
funds held in the account other than to the non-resident individual account holder
nor to make payment by way of gift to a resident on behalf of the non-resident
account holder or transfer funds from the account to another NRO account.
4.
Necessary amendments to Notification No. FEMA 5/2000-RB dated May 3, 2000 [Foreign
Exchange Management (Deposit) Regulations, 2000] are being notified separately.
5.
AD Category - I banks and authorised banks may bring the contents of the circular
to the notice of their constituents and customers concerned.
6.The
directions contained in this circular have been issued under Sections 10(4) and
11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions / approvals, if any, required under any other law.
Yours
faithfully,
(Salim
Gangadharan)
Chief
General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/419 · issued 25 May 2007. The plain-English explanation above is BankPulse’s own independent summary.
Update internal NRO account policies to permit PoA operations as per the circular.
📜 Compliance
Train staff on the allowed and prohibited transactions under PoA for NRO accounts.
Implement monitoring mechanisms to ensure PoA holders do not repatriate funds except to the account holder or remit current income net of taxes.
Communicate the new facility to existing and prospective NRO account holders and their PoA holders.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an Operations officer at a bank this circular applies to (AD Category-I banks, Authorised banks, Non-resident individual NRO account holders, Resident Power of Attorney holders, Bank compliance and operations teams), your first concrete step on “NRO Account Operation via Power of Attorney Expanded” is: “Update internal NRO account policies to permit PoA operations as per the circular.” (RBI issued this 25 May 2007).
Circular: RBI/2006-2007/419 -- NRO Account Operation via Power of Attorney Expanded
Issued: 25 May 2007
Action required: Update internal NRO account policies to permit PoA operations as per the circular.
Action required: Train staff on the allowed and prohibited transactions under PoA for NRO accounts.
Action required: Implement monitoring mechanisms to ensure PoA holders do not repatriate funds except to the account holder or remit current income net of taxes.
Action required: Communicate the new facility to existing and prospective NRO account holders and their PoA holders.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3556&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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