BANK ACCOUNT STATUS

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If you're an Indian citizen living abroad for an extended period, your resident bank accounts need to be converted to Non-Resident Ordinary (NRO) accounts. Failing to do so after becoming a Non-Resident Indian (NRI) is illegal under FEMA regulations and can lead to significant penalties, including daily charges until compliance. It's crucial to make this conversion promptly to avoid legal issues.

Jayaraman Jaikumar

Jayaraman Jaikumar (Querist)

19 May 2020 My relative after the expiry of his wife is living with his daughter in usa. He is there for 2 years and not sure when he will return to india. Should he change his bank accounts accordingly

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)

19 May 2020 Yes, he should get the accounts converted into NRO account. FEMA says that a person should get his /her bank account converted to Non resident ordinary when he becomes a non resident.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

21 May 2020 When the resident status of Indians changes to a non-resident (NRI), they have to close the existing resident saving bank account or convert them into NRO accounts. According to FEMA, continuing with the same resident status is illegal for NRIs.

As per section 13 of FEMA, 1999, the person contravening the act will be liable to pay a penalty up to 3 times the amount involved in it or Rs 2 lakh when the sum is not quantifiable. Further, a penalty of Rs 5,000 will be charged every day from the 1st day of intervention until the penalty is paid.

So, it is advised to convert the resident account to NRO account as soon as the Indian gets NRI status.

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