What changed
Previously, AD Category-I banks had to close resident accounts of foreign nationals upon their departure from India. Now, banks can re-designate these accounts as NRO accounts to facilitate receipt of pending bonafide dues.
What it means for you
This change gives foreign nationals more flexibility to settle financial matters after leaving India, reducing the need for alternative remittance channels. Banks must implement robust internal controls to monitor credits and debits, ensuring only legitimate dues are credited and repatriated within the annual limit.
What you must do
- Obtain full details from the account holder about expected legitimate dues before re-designating the account as NRO.
- Verify that all credits to the NRO account are bonafide dues from the account holder's residency period.
- Ensure repatriation is done immediately after tax compliance, not exceeding USD 1 million per financial year.
- Set up an internal control mechanism to monitor all transactions and close the account once all dues are repatriated.
Who it affects
AD Category-I banks, Foreign nationals employed in India with valid visas
Can a foreign national keep the NRO account open indefinitely?
No, the account must be closed immediately after all declared dues have been received and repatriated.
What is the maximum amount that can be repatriated from this NRO account per year?
The repatriation is capped at USD 1 million per financial year.