What changed
Earlier, NRIs could only be joint holders on 'former or survivor' basis and could not operate the account during the resident's lifetime. Now, RBI allows 'Either or Survivor' operation, giving NRIs operational convenience. The account remains a resident account, and the NRI must not credit own proceeds or gain beneficial interest.
What it means for you
Banks can now offer more flexible joint account structures for residents with NRI relatives, reducing operational friction. However, strict compliance is needed: no NRI funds can enter the account, and if the NRI becomes survivor, the account must be reclassified as NRO. Banks must verify the need and obtain a specific declaration from the NRI.
What you must do
- Update internal policies and system rules to allow 'Either or Survivor' joint holder facility for NRI close relatives in resident accounts.
- Ensure no credit of NRI's own cheques, remittances, cash, or card proceeds into such accounts.
- Obtain a signed declaration from the NRI joint holder as per the circular's format before activation.
- Monitor accounts where NRI becomes survivor and promptly reclassify as NRO account as per FEMA rules.
- Train staff on the distinction between 'former or survivor' and 'either or survivor' and the compliance conditions.
Who it affects
Authorised Dealer (AD) banks handling resident savings/current/FD/RD accounts, Resident individuals with NRI close relatives, NRI close relatives seeking joint account operation, Bank compliance and operations teams
Can an NRI joint holder deposit their own foreign currency or rupee funds into this resident account?
No. The circular explicitly states that cheques, instruments, remittances, cash, card or any other proceeds belonging to the NRI close relative shall not be eligible for credit to this account.
What happens if the resident account holder dies and the NRI joint holder becomes the survivor?
The account must be reclassified as a Non-Resident Ordinary Rupee (NRO) account as per extant regulations. The onus is on the NRI to inform the bank, and all NRO rules will apply.
Does this facility apply to all types of resident accounts?
Yes, the circular extends the joint holder facility to all types of resident accounts including savings bank accounts, fixed deposits, recurring deposits, and current accounts.